Economic Development
On 16 March 1900 President William McKinley appointed the Second Philippine Commission (the Taft Commission) headed by William Howard Taft. Between September 1900 and August 1902, it issued 499 laws, a judicial system was established (including a Supreme Court), a legal code was written, and a civil service was organized.
The Taft Commission, appointed in 1900, viewed economic development, along with education and the establishment of representative institutions, as one of the three pillars of the United States program of tutelage. Its members had ambitious plans to build railroads and highways, improve harbor facilities, open greater markets for Philippine goods through the lowering or elimination of tariffs, and stimulate foreign investment in mining, forestry, and cash-crop cultivation. In 1901 some 93 percent of the islands' total land area was public land, and it was hoped that a portion of this area could be sold to American investors.
Those plans were frustrated, however, by powerful agricultural interests in the United States Congress who feared competition from Philippine sugar, coconut oil, tobacco, and other exports. Although Taft argued for more liberal terms, the United States Congress, in the 1902 Land Act, set a limit of 16 hectares of Philippine public land to be sold or leased to American individuals and 1,024 hectares to American corporations. This act and tight financial markets in the United States discouraged the development of large-scale, foreign-owned plantations such as were being established in British Malaya, the Dutch East Indies, and French Indochina. In July 1902, war ended in the Philippines, with more than 4,200 U.S. soldiers, 20,000 Filipino soldiers, and 200,000 Filipino civilians dead.
The Taft Commission argued that tariff relief was essential if the islands were to be developed. In August 1909, Congress passed the Payne Aldrich Tariff Act, which provided for free entry to the United States of all Philippine products except rice, sugar, and tobacco. Rice imports were subjected to regular tariffs, and quotas were established for sugar and tobacco. In 1913 the Underwood Tariff Act removed all restrictions. The principal result of these acts was to make the islands increasingly dependent on American markets; between 1914 and 1920, the portion of Philippine exports going to the United States rose from 50 to 70 percent. By 1939 it had reached 85 percent, and 65 percent of imports came from the United States.
Coffee requires a climate whose average temperature ranges between 16 and 24 degrees Centigrade, standing next to sugar cane in its high heat requirement. In localities having both heat and moisture, it? growth is stronger and more luxuriant, as is manifested in various ways. In very hot climates the coffee plant grows well, but needs the. shade of some other suitable tree, whereas in cooler climates it thrives best without this protection. The soil most suitable for its cultivation is one that is light and moist, but not marshy. Reddish soils, somewhat sandy, or black soils, without too much clay, are adaptable. If the land is virgin soil it should be thoroughly cleared, plowed deeply two or three times, and then harrowed; if the land is old it should be well fertilized.
The rise and final decline of the coffee industry in the Philippine Islands offers a very interesting study. Prior to 1890, coffee was an important product of several provinces of the Islands and constituted a source of considerable wealth in these sections. In 1890 and for several preceding years it ranked fourth in order of importance among exports, being in value only a little lower than tobacco. Subsequent to 1890, due to the devastation of coffee plantations by insects and diseases, Philippine production rapidly diminished and finally almost ceased.
Philippine coffee, though stated by some to rival in quality that of Java, did not seem to have received such recognition in the markets of the world. Prices during the years of highest production were only about 7 cents a pound. On account of the diminishing production of the latter 1880's, however, prices showed great increases, and export values, in spite of reduced quantities, came to exceed 3,000,000 pesos, representing an importance and degree of prosperity for the industry in tragic contrast with the single peso's worth of coffee exported in 1916.
By 1920 Hemp was considered the premiere industry of the Philippine Islands, not only because it occupied the front rank of the major exports, but also because nature granted climatic and soil conditions for a natural monopoly over hemp or "abaca" growing. Hemp represented millions of dollars in investment and revenue and provided a living for two million Filipinos or nearly one-quarter of the entire population. Hemp is a fiber obtained from a banana-like plant known as "abaca," which grows only in the Philippine Islands. It is manufactured into high grade cordage and used in shipping and construction operations throughout the world. Previous to American occupation, the entire hemp business of the Philippines was in the hands of a few Manila firms, almost exclusively British. During the next 20 years American and Filipino firms entered the market and came to control one-third of the hemp business, dealing principally in the medium and higher grades.
In 1931 there were between 80,000 and 100,000 Chinese in the islands active in the local economy; many of them had arrived after United States rule had been established. Some 16,000 Japanese were concentrated largely in the Mindanao province of Davao (the incorporated city of Davao was labeled by local boosters the "Little Tokyo of the South") and were predominant in the abaca [hemp] industry. Yet the immigration of foreign laborers never reached a volume sufficient to threaten indigenous control of the economy or the traditional social structure as it did in British Malaya and Burma.
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