1939: Philippine Islands

Political Problems.

The Philippines problem, thought settled by the Independence Act of 1934, has been revived by the unstable conditions in the Far East. Even more than its aggression in China, Japan's advance in the South Pacific, with the seizure this past year of Hainan Island and the Spratly Islands, has raised fears, both in this country and in the Philippines, as to the fate of these insular possessions of the United States after complete independence is consummated in 1946. The 'realistic re-examination' proposal of the former American High Commissioner, Paul McNutt, is indicative of one section of opinion, both American and Filipino. The Official attitude of the United States, as voiced by the new High Commissioner, Francis B. Sayre, who was appointed in July, is that the initiative for reconsideration must come from the Government of the Commonwealth. President Quezon's public utterances imply that he would view re-examination with favor, and it is commonly thought that Mr. McNutt reflected the views of Quezon and his Nacionalista party. On the other hand, as a point of practical politics, President Quezon cannot openly oppose independence, for such an about-face would be considered a 'betrayal' and would be made political capital of by the opposition party of General Aguinaldo and by the more left-wing groups, the Sakdalistas and the newly-formed Ganap party, led by Benigno Ramos, former leader of the Sakdal party, which stands for immediate independence and is considered pro-Japanese.

This question of reconsideration may become a partisan issue in the presidential elections of 1941. Certain constitutional amendments, one of which would provide President Quezon with a chance to run again, were considered at a convention of the Nacionalista party in July and are the subject of continued debate in the Islands. These would substitute a bi-cameral legislature for the present unicameral legislative body, and a four-year presidential term, with eligibility for one reelection, for the existing six-year term without such eligibility. It is believed that if this change is made, Manuel Quezon will be receptive to reelection.

Question of Independence.

The barriers to independence are two-fold. The economic plight of the Philippines, once they lie outside the United States' tariff wall, is a matter of concern to many groups of Americans and to Filipinos who appreciate the effect independence will have on the standard of living. To cushion the economic shock of losing the advantage of a duty-free American market, a bill was signed by President Roosevelt on Aug. 7, providing for a system of gradually decreasing duty-free quotas in place of the export taxes that were to have gone into effect in 1940, and disastrously, on four major Philippine products; cigars, scrap tobacco, coconut oil, and pearl buttons. These industries, which operate at present with small profit margins, account for about 40 per cent of Philippine exports to the United States and support a large majority of the population in and around Manila. Copra and abaca (manila hemp) were assured a place on the free list at least until 1946. A wider interpretation was given to the uses to which refunds from the coconut oil excise tax may be put by the Commonwealth Government. (President Roosevelt had, earlier in the year, by a threatened veto checked proposed legislation which would have increased this tax from 3 to 5 cents a pound.)

These amendments to the Independence Act must be ratified by the National Assembly and possibly be submitted to plebiscite. They represent a compromise measure, the original Tydings bill, embodying the main recommendations of the Joint Preparatory Commission on Philippine Affairs, which were sent to the United States Congress on Jan. 24, having been tabled. Although the bill as passed provides a breathing spell, and also advances the date to 1944, or earlier, for an economic conference to study the future economic relations between the United States and the Philippines, it does not touch the problem of economic security after 1946 and leaves the fundamental problem of the sugar industry and other basic problems unsolved. Philippine economy has been built upon heavy dependence on the American market, 85 per cent of its exports going to the United States and 60 per cent of its imports being derived from this country. Furthermore, the diversification of agriculture and industrial development essential to a sound economy have been hindered by American demands for a few tropical products, such as sugar, coconut oil, copra and manila hemp. Thus, the American people are morally obliged to prevent economic disaster in the Islands after 1946. Moreover, with independence the loss of the American market would be likely to increase agrarian discontent, which has already taken violent form in parts of the archipelago.

Fear of Japan constitutes the second great barrier to independence. The extensive defense program developed since 1935 under the direction of General Douglas McArthur, though a severe drain on the Insular Treasury, calling annually for 20 per cent of the Islands' income, has been undertaken to meet the situation in 1946, when the Philippines will no longer have the protection of the United States Navy. Gen. McArthur has asserted that 'when the Philippine defense plan has reached fruition it will represent a defensive strength that would cause even the strongest and most ruthless nation in the world to hesitate about attacking the Islands.' But in his suggestion of Nov. 1 that President Roosevelt open negotiations for the neutralization of the Philippines, as authorized under the Independence Act, President Quezon admitted the essential vulnerability of an independent Philippines, if they should be the victim of aggression, 'even though we should arm every male citizen.' Japan's aggression in China and, more recently, the European War have increased this skepticism. Moreover, the international situation has raised queries regarding America's future policy in the Far East, and it is from this perspective that revision of the Independence Act is considered in some American circles. War in Europe has made the American public mineral-conscious, too, and the base-metal industries or reserves in the Philippines increase the unwillingness of certain elements in the United States to relinquish to Japan, a closer and, therefore, more logical market, Philippine chromium, manganese, iron and copper.

Industry and Finance.

President Quezon's 'social justice' program intended to improve the conditions of the laboring classes and to correct some of the feudal abuses rooted in the old Spanish system of landlords, found further statutory expression this year in an eight-hour labor law, a minimum daily wage of one peso, and a law providing compulsory arbitration between land-owner and tenant. Although worthy in aim, the experience of the last few years does not hold out great promise for the ameliorative effects of this and similar legislation passed since this program got under way.

According to statistics published by the Department of Labor, the present average daily income of all workers in the Islands is 60 centavos. During the first half of 1939, 97 strikes and labor disputes, involving 13,529 workers, were registered, 60 of them settled in favor of the laborers, 5 in favor of employers, and the balance submitted to the Court of Industrial Relations. The Quezon Government favors strong labor organization and collective bargaining, but opposes strikes on the ground that the machinery is available, in the Department of Labor and this court, to make them unnecessary. For a number of years labor has been irreconcilably split into warring factions, but on June 5, representatives of about 30 factions signed a pact, bringing them together under a labor commission composed of Government officials and labor and employer representatives.

To aid in financing a long-range economic program and to make agricultural credits available on easier terms, the National Assembly this year voted to establish a new agricultural and industrial bank, whose P 150,000,000 capital is to be set aside annually out of the coconut oil excise tax refunds, and a reserve bank, modeled after the United States Reserve System. The rate of interest on crop loans has been reduced from 6 to 5 per cent, beginning with the 1939-40 crop. A new tax code was approved by the Assembly on May 13, overhauling the Islands' internal revenue system and designed to add $4,500,000 to revenues during the 1939-40 fiscal year.