Crossroads (Toward Philippine economic and social progress)
Philippine Star, 11 September 2019


We explore more aspects of Philippine economic history during the American colonial period (1898 to 1941, inclusive).

This was a critical period of preparation for political independence which would become real by 1946.

Some development metrics. The first official census conducted by the Spanish government in 1877 put the population of the Philippines at 7.5 million Filipinos. Five years after the transfer of control from Spain, the census of 1903 undertaken by the American administration counted 17.1 million Filipinos.

Around the beginning of American pacification of the country, there were 196 kilometers of railroads in place; by 1938, 1,353 kms. Motor vehicles which were negligible numbered 40,656 by 1933; roads and bridges which were 397 kms. in 1908 were 15,214 by 1933. Telegraphy lines which were 5,478 kms. in 1903 had grown to 14.366 kms.

The enrollment in public schools that already numbered 227,600 in 1903 had expanded to 1.496 million enrollees by 1938. Where there was only one dispensary in 1903, there were 1,082 in the islands by 1933.

Colonial developments under American rule. During more than four decades of American colonial administration, the Philippines experienced a long period of relatively uninterrupted economic growth and social development.

There were fluctuations due to conditions unique to the US and the world economy, but by and large, there was a continuous consolidation of economic and social gains.

Whether to do it for the welfare of the Filipinos or to glorify itself as a model colonial administrator or as forebearer of the American expansionist creed embodied in the so-called Monroe doctrine as applied to its new Pacific dominion in the Asian continent, American government policy from the beginning was to improve the capacity of the Filipinos for self-government.

There were first-things first. Pacification was important: to permanently quell the incipient revolutionary republic that waged a war of independence.

After this was achieved by the sword (or, say, “by the Winchester rifle”), and by military command, the civilian peace-making administrators – egged on by the politicians and officials in Washington DC – took over to restore peace, order and development in the new colonial acquisition.

Infrastructures: public works and health systems. They set up essential public infrastructures: roads, bridges, ports, irrigation, water systems for public health.

They hired local officials and induced local governments to perform their duties through directives from central bureaus run by American administrators. They hired capable locals in the central bureaus to help the colonial administrators.

They improved public health through the eradication of disease and the improvement of public sanitation: waterworks, health centers, education.

Public education. Access to free public education was one of the earliest priorities, along with the improvement of local government administration.

They brought in shiploads of new American teachers to the country. Thus, many of the early public school teachers were called “Thomasites”, who arrived in the country on board the SS Thomas. The elementary school system was given the highest priority.

The improvement of educational facilities was a high priority. The early focus was to make available public education for children of school age. Then coverage graduated to the provision of secondary education and also attention to schools for arts and trades and agricultural schools in the more rural areas.

The educational program required public works for new schools spread around the regions. A matching program was to manage and help create the supply of new teachers. The Philippine Normal College was set up and support for regional normal teacher training was actively undertaken. By 1908, the University of the Philippines was also created.

The government bureaucracy. Among the first acts of occupation was to set up a system of pensionados to develop the human capital for the government bureaucracy. Selected Filipino public officials and promising graduates were sent to the United States to gain specific work skills. Some of the pensionados were to enable those going into academic work to earn higher educational degrees.

The pensionado system helped to create a steady cadre of new officials who were developed to go into the public service. Initially, the principal bureaucracies were led by American public servants. In time, succession led to Filipinos taking over important posts in the government bureaucracy.

Economic and commercial expansion. As soon as American political power was established in the country, business opportunities opened for American capital. They joined those who were already doing business in the country.

Commerce, transportation, construction, and other activities in economic sectors were actively explored. Commercial opportunities opened up businesses in trading, both in imports of American goods and the expansion of domestic industries that had prospects in the American market.

The Philippine economy became part of the larger American market. Such integration enlarged its potentials for investment opportunities. Investments in construction, local transport, and utilities were natural activities to be pursued.

Also, American investors found opportunities in the trading activities in industries that were already established and those that are prospectively profitable and in those industries that exported to their home market.

At the turn of the century, the Philippines was already actively engaged in the export of of sugar, tobacco, coconuts, abaca, and other agricultural products.

The initial integration of the Philippine market into the US market made the country become a vibrant supplier of these products as well to the American market.

The expansion of sugar products, coconut products such as coconut oil and copra, and abaca products almost immediately became rapid and threatned to pose competition for agricultural and industrial interests in the American market.

As the trading relationships enlarged, threatened American interests succeeded in getting their government to impose quantitative quotas and other forms of trade controls that would limit the expansion of Philippine exports of sugar and on coconut oil imports.

Such problems led to a system of quantitative quotas and special types of trade taxation that were unique in defining some of the difficult trade issues between colony and colonial master. These issues constituted sharp economic divides by the time of the clamor for independence for the colony.

To be continued: Trade, the gold exchange standard and the balance of payments, American colonial period.