A system of United States bases in the Philippines, therefore, instead of a vague neutralization proposal, may underwrite that country’s security in the future. There has been little or no adverse American comment on this proposal as yet nor has the Filipino opinion that has come to our ears been unfavorable.

But this new policy raises many questions about our future in the Pacific. How much responsibility will the United States have for maintaining peace in that area? What steps will be necessary to enable us to fulfill that responsibility?

The lesson of 1941–42 showed the need for strong forces in the Philippines and a secure supply line all the way across the Pacific. Must we now build a series of air and naval bases through the former Japanese mandates to link our West Coast and Hawaii with our bases in the Philippines? Or will our interests be sufficiently protected if such Pacific bases are under some form of international authority?

If a really international security system should develop, how will that affect the position of the United States in a free Philippines? Would the Filipinos be as willing to have bases in their country under international control as they are said to be to have United States bases there?

No matter how enthusiastic the Filipinos may now appear to be about our mutually protective policy, the time may come when they will regard our bases there as a serious infringement of their sovereignty. They know by past experience that changes in American administration are likely to mean changes in Philippine policy. Philippine products might find the American market increasingly restricted, and better commercial arrangements might be made elsewhere. Not only commercially, but culturally, the free Philippines might be drawn into new spheres of influence. Suppose the United States regarded such alignments with disfavor, would our relations with the Philippines present new difficulties?

A real international order of security and trade would outmode any such developments. But until such a system has taken on more form and substance than it now has, our own arrangements with the Philippines must be as realistic as possible.

Postwar problems, many of them now unforeseen, are bound to emerge in the Pacific. If we find ourselves involved in these, because of Philippine policies with which we may not agree, how far shall we go to impose our will on a free but weak nation? The answer is not ours alone-but we have a major part in its making.

Freedom to starve?

In our trade relations with the Philippine republic, we also have important decisions to make. Much as our former indeterminate policy with regard to the security of the islands has been criticized in many quarters, our economic policy has been even more open to question. When the Independence Act was passed in 1934, many observers, as well as some Filipinos and Americans, interpreted the kind of freedom we were promising the Philippines as “freedom to starve.”

The significance of this is to be found in the lopsided economic development of the Philippines during their period of free trade with the United States. Free trade began in 1909, except for certain restrictions upon sugar and tobacco which were removed in 1913. From that time on, Philippine exports were developed principally for the American market. The important items were sugar, coconut products, hemp, and tobacco. World War I boomed the sugar industry in response to American demand.

For twenty-five years, more than half the total foreign trade of the country was with the United States; during the 1930’s, that share approached three-quarters of the total. Of the leading exports, sugar, coconut oil, cigars, and embroideries went almost entirely to the United States—and their combined value amounted to well over half the value of all exports.

If there had been any assurance that this trade relationship would continue, the situation would not have been so dangerous. Agitation in the Philippines for political independence, however, never slackened during all the years that economic dependence increased. When political freedom was promised, in 1934, provisions were made to force economic independence upon the islands at the same time. There had been some intelligent preparation for political independence. There had been little or no preparation for economic separation.

Can the islands be economically free?

By the original terms of the Independence Act, the largest Philippine exports which went mainly to the United States were to be limited by quota or were to pay export taxes during part or all of the ten-year Commonwealth period. Other United States legislation imposed excise taxes on coconut oil and sugar. After the country attained its independence, unless other arrangements were made in the meantime, all imports into the United States from the Philippines were to pay the full duty.

It is no secret that much of the support in the American Congress for Philippine independence came from the pressure of economic interest groups. Domestic beet-sugar growers and refiners combined with the owners of offshore (Hawaiian, Cuban, etc.) cane-sugar properties, and the American dairy industry linked arms with domestic vegetable-oil interests. These otherwise rival groups joined in pushing for Philippine independence—and the prospect of tariff protection against the competition of Philippine sugar and coconut oil.

At the same time, objections to independence were raised by Americans with interests in Philippine products. That the independence issue was won was due in some measure to the economic interests of American groups back home. But it was due in part, as the Filipinos themselves sturdily assert, to America’s traditional support of the cause of freedom.

Although the Independence Act did protect certain American products, it was intended also to strengthen Philippine economy by weaning the country away from its dependence on a few large crops and on exports to the American market. The Filipinos accepted the act as the best they could hope for at the time and placed their faith in the statement made by President Roosevelt when he recommended the act to Congress—“Where imperfections or inequalities exist, I am confident that they can be corrected after the proper hearing and in fairness to both peoples.”

Several amendments easing some of the more stringent clauses were passed by Congress in 1939 on the recommendations of a joint committee of Americans and Filipinos who had been studying the situation. The Filipino Rehabilitation Commission, composed of nine Americans and nine Filipinos, which was set up following Congressional action of June 1944, will consider the whole problem of trade relations, plus questions of relief and rehabilitation caused by the war and Japanese occupation.

Co-prosperity or co-poverty?

The result of Japanese occupation of the Philippines has been to disrupt Philippine economy to a disastrous degree and to cause suffering and hardship which it will take years of work and large sums of money to overcome.

Foreign trade almost ceased. Japan used its limited shipping space to take only those products from the islands which were essential for carrying on the war-minerals, hemp, lumber, and some coconut products. Having no competition, the Japs paid only the minimum necessary to get the goods and paid in practically worthless military yen. Nothing was brought in for the civilian population, which had depended on imports for textiles, all kinds of manufactured goods, and a variety of foods, even including rice. All kinds of commodities became scarce, prices skyrocketed, black markets sprang up.

Attempts of the Japanese and their Filipino puppet government to encourage the people to increase their production of food were unsuccessful, for the Filipinos realized that their food crops were wanted by the Japanese and would be taken by them. With inter-island and overland transportation controlled by the military, it was no longer possible to ship food from surplus to deficient areas. Hunger and starvation were the lot of many Filipinos.

Japan’s entire program in the economic field was calculated to feed its war machine. Since Japan already had all the sugar it wanted, it reduced sugar land; the greater part of the remaining cane was used to produce alcohol for transportation and industrial use. Japan tried to initiate an ambitious program of cotton production, with unsatisfactory results. It brought in some textile machinery, but lacking sufficient raw material, that part of its program also was unsuccessful.

When law and order are restored in the islands and people return to their homes to resume normal life, many will find their fields in bad condition, as a result of military operations or of disuse. Their work animals, seeds, and tools may no longer be available or may be user. The sugar lands, in particular, and sugar mills, from which the Japanese have removed much machinery, will present a large problem.

Among the problems will be: To what extent is sugar to be restored as an important factor in the islands’ foreign trade? What are the prospects for cotton in those limited areas where the new crop has been introduced? What new products will the world market want which can be grown in the islands? How are all of their domestic problems to be met and how is their domestic program to be fitted into the wider program of postwar trade?

What kind of postwar economy?

Certain principles have already been laid down by the Philippine government. During the transitional Commonwealth period, officials recognized that drastic changes must take place if their country was to be kept from ruin, even before the period of complete independence.

They took steps to reduce those crops—sugar, tobacco—which faced eventual restriction if not doom; to increase food production; to improve the quality of products which could be sold to the United States and elsewhere, such as copra and hemp. They encouraged new plantings of rubber and cotton, regarded as hopeful for domestic use and for possible export. With a view to greater self-sufficiency, they started a few government industries—textile manufacturing, food and fish canning.

It may be assumed that the government will continue to plan along these lines: reduction of sugar and tobacco; improvement of those crops which will still be able to compete in world markets; encouragement of new crops for export; and search for new markets for old and new products. Self-sufficiency in food is a prime objective. Greater domestic production of articles for home use, such as textiles and shoes, development of by-products from sugar—alcohol, plastics—and a large field of light industrial development are contemplated by the authorities.

Minerals, too, may offer a growing field for exploitation. Gold will probably continue to be an important export for some years. Base metals, which had been worked only a decade before the war, will probably be in great demand for industrial use—but largely for export, for the Philippines lack the necessary oil and coking coal for development of heavy industry.

The Philippines, though not a fabulously rich area, do have ample resources, if wisely used, to provide their comparatively small population with a good standard of living. They will, however, have to depend upon exports to buy many of the things which they cannot produce at home. Therefore the kind of trade agreements which they make will have an important bearing upon their future.

How long will American aid be needed?

The first years after the war will present manifold difficulties. American cooperation may be counted upon at least during the period of military necessity: Sanitary facilities, roads and other communications, water works, and power plants will be restored, repaired, or built anew, as the military program dictates.

The rehabilitation of industries, however, is a job for the Filipino people themselves which will call for planning and assistance from their government. In such planning the possibility for renewed trade with the United States, with preferential treatment for some products, will be an important consideration.

Here thoughtful consideration by the United States will be required. Are we prepared to make concessions to the Philippines, so that its former important exports to us may be resumed under preferential arrangements? In view of the past experience of both countries, would it be wise to restore an unbalanced economic system, merely to show the Filipinos that we, aware of their economic dependence on us, are now willing to discharge; an obligation to make up for past errors?

It seems to be taken for granted that the Filipinos will be eager to resume somewhat the same kind of close trade relationships with the United States that they used to enjoy. This may be true, insofar as their officials and leaders are supported by the old landed interests whose fortunes have been made by such trade. But some of the younger and more farsighted economists in the Philippines regard a return to the old pattern as a courting of renewed difficulties. They know that the United States Congress could at any time clamp down upon imports and Philippine industries might again find themselves where they were with the passage of the original Independence Act.

Japan was the only country of any importance in Philippine commerce, besides the United States. Its trade was largely noncompetitive. Japan took raw products—hemp, lumber, copra products, iron (for which there was no other market)—and in return sold manufactured goods at a price which the Filipinos were usually able to pay. Will the Japanese, through their ruthless treatment of the Filipinos during the last three years, have lost any chance of future good relations with a free Philippines? Can we assume that Japan will not figure in international commerce to any great extent for many years?

The rest of Asia does not offer a promising market for many Philippine products, nor can it yet supply the islands with the variety of manufactured goods formerly imported. For some time, the Philippines will probably continue to be a producer and seller of raw materials and a buyer of finished products, and especially of capital goods. Through custom and necessity the United States market still seems the most attractive. Thus we come back to the fundamental economic problem in our relationships.

If preferential arrangements between our two countries are considered unwise by Congress, what other measures can be taken? Are we willing to provide government subsidies to enable the Filipinos to develop new agricultural products; or, more important still, to establish industries whose products might eventually compete with our own exports to the Philippines?

These are the principal questions which must be faced by the United States and the Philippines. The answers must be made by the people of both countries, operating through their duly elected representatives. Eyeing the success of the American-Philippine association, other colonial peoples of the Far East are already demanding that the colonial powers grant them a larger degree of independence. And the colonial powers, with the same example and its result in mind, are moving to comply.

It is of vital importance, therefore, that the correct answers be found to such questions as we have raised. America’s attitude toward the Philippines has already set a new standard in the relationships of peoples. Can we and will we improve that standard to the mutual advantage of both peoples?

From EM 24: What Lies Ahead for the Philippines? (1945)