cultivation in the countryside deepened economic inequality. This process made the tenants and the vast majority of the people not only relatively but
also absolutely poorer (Constantino 1990). The depression, which the
Philippinesexperienced from 1891 to 1895, politicized both the ilustrados and the peasantry. The Spanish government in the Philippines was
over-thrown in 1898 by a social uprising led by the Katipunan movement.7
However, on December 10, 1898, the Spaniards and the Americans signed
the Paris Treaty, under which Spain ceded the Philippines to the United - States, for the price of US 20 million dollars (Choinski 1969, Rocamora
1993). There were four major forces on the stage in the crucial days of
1898: the Spanish Colonizers, the American imperialists, the Philippine ilustrados and the Philippine masses. The first three wanted to control the fourth. The ilustrados supported by the Philippine masses in 1898, fought
the Spaniards. The AmerIcans secured by the Paris Treaty the formal
colonial rule over the Philippines.
7 Katipunan is a Tagalog word, literally meaning union or association. The organization Katipunan is also called "Sans of the People".
3.2 US colonial and imperial power
American land policy in the Philippines was conservative. It did not change but rather strengthened the landownership pattern created by the Spaniards.
OfficIally the policy intended to encourage the growth of a dass of small to middle farmers. However, in reality the policy worked to support and encourage the big landlords (Choinski 1969). The mestizo landed elite was the stabilizing factor needed by the Americans. The Americans had a
two-fold interest in strengthening this elite. The landholdings of this elite
provided the raw-materials that the Americans required. The Americans wanted the raw materials as cheaply as possible and encouraged the landed elite to orient their production towards production with minimal production
costs. This is called a production for absolute surplus value. The drive
towards a mode of production producing an absolute surplus profit and at the same time connected to a merchant capitalist world economy can be understood as a existence between two modes of production. This co-existence of modes ofproduction served, as discussed in chapter two, the interest of the colonizer. Endogenous development of capitalism in the centre-nations dissolved feudalism in the centre and replaced a capitalist m?de of production.
Even if feudalism were replaced by capitalism in Europe, the feudal and pre-capitalist mechanisms were strengthened in order to obtain profit from an absolute surplus value. In other words, as we discussed in chapter two,
the economic basis, created a social formation where P olitic al and
ideological power still were. strong ruling mechanisms in the society. The ideological power was introduced by the Spaniards, and was the cathulic church. The church still is the single most powerful,ideological force in the
Philippines today.
The demand for export cropswas a powerful stimulus for more land purchases by landowners. Hacienderos enlarged their holdings and
intensi-fied the exploitation to take fuller advantage of the demand for their
products under free trade conditions. The hacienda system that hadbeen born as a result of foreign- Spanish rule, did not vanish in the way feudal
formations vanished in Europe, i.e. by the entrance and conquest of
capitalism.
From the American colonial takeover in 1898 until nationalliberation in 1946, the Americans were occupied with the development of agricultural export production. There was an increased demand for imported raw materials in the US. Since the Americans had controlover the Philippines, they had an interest to, keep production costs as low as possible. Low cost
were possible by making the Filipino people work as tenants. The key
instrument for the trade policy was a free trade arangement imposed by the
US government on the Philippines through the Payne Aldich Act of 1909
(Ofreneo 1980). This meant thatAmerican goods could enter the
Philippines without any taxation or import regulations. The imported items were mostly processed goods while the Philippines exported raw-materials to the US. Before 1909, this kind of exdusive free trade agreement was
hindere d by the Paris Treaty, giving Spanish merchants equal trade
opportunities with the Americans for a period of ten years. Both the Paris Treaty as well as the Payne-Aldich Act should thus be seen as regulation
for the benefit of an increased absolute surplus value controlled by the
colonizers.
American business grew fast and became decisive for the economic
development of the islands. In 1905 the US share of the total value of
imports was only 18.6 per cent, by 1920 it was 61,8 per cent, and by 1945 it was 87.3 per cent (Republic of the Philippines 1990). The US share of exports also increased from 44.4 per cent in 1905 to a peak of 82.8 per centin 1940 and then rapidlydecreasedto 34.1, per cent of total value of exports
in 1945 (Republic of the Philippines 1990). 1945 was, however, a special year. The share of exports going to the US rapidly increased during the 1950s. Figure 3.1 shows these trends. The tendencies found here have been used by theorists arguing that a trade dependencyestablished during the
colonial period prevented the development of the home market. It can
safely be conduded that the US was the most important economic partner
for the Philippines in the first half of the twentieth century.
Coconut production, which at this time was an important part of export trade, developed quickly because of the soap and margarine industries abroad which stimulated the production and trade in copra. By the time
World War I broke out, one-fourth of all the copra in world trade was
supplied by the Philippines. The war created a brisk demand for coconut oiL. Its high glycerine content made it highly prized in the manufacture of explosives. By the time the war ended, 40 relatively large coconut oil mills were in operation in the Philippines. However, with the coming of peace, a heavy drop in demand forced most of these mills to dose. Eight large plants remained; two American, two British, two Spanish, one Chinese, andone Filipino (Constantino 1990).
Figure 3.1
Export and Import trade with the US, 1905-1945
100
Source: Republic of the Philippines 1990
From 1920 to 1930, coconut exports induding copra increased by 223 per cent. Of the USD12 million invested in mills and refineries, USD5,5 million was American capital, USD3,5 million was British capital and the rest was Chinese and Philippine capital (Republic of the Philippines 1991).
By 1935, ten factories were supplying almost all the desiccated coconut being exported to the United States. Six of these factories were American, two were British, one was Chinese and one was Japanese. The three largest
soap factories in the Philippines were American, Swiss and Chinese
(Constantino 1990).