Roots If Backwardness

S&S Quarterly, Inc.
Guilford Press
The Roots of Backwardness: An Analysis of the Philippine Condition

Author(s): Edgar E. Escultura
Source: Science & Society, Vol. 38, No. 1 (Spring, 1974), pp. 49-76
Published by: Guilford Press
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THE ROOTS OF BACKWARDNESS:AN
ANALYSIS OF THE PHILIPPINE CONDITION*
EDGAR E. ESCULTURA
OPTIMISTIC GOVERNMENT REPORT puts the per

capita incomeof the Filipinosin 1966 at P627 per year,one
of the lowestin the world.1The conditionof the peasants,
who compriseabout 75 per cent of the population,is even worse,
witha per capita incomeof P500 per yearas of 1969.2These figures
were drasticallyalteredforthe worseovernightwhen the peso was
devalued in 1970 by more than 50 per cent. The distributionof
thenationalincomeis lopsided.Accordingto theEconomicDevelop-
mentFoundation,on thebasisof statistics releasedby the Philippine
Survey of Households in 1966, 72.2 per cent of the 5.3 million
Philippinehouseholdshad annual incomesbelow P2,000, 17.1 per
cent earned fromP2,000 to P4,999 and only 4.7 per cent earned
morethanP5,000.3Accordingto a 1960 PhilippineJointLegislative-
Executive Tax Commission report only 1.1 per cent earned
PI 0,000 or more,while thosewho earned over PI 00,000 comprised
one tenthof one per cent. The last group were known to hold the
lion's shareof the national incomeand assets.4
• Abridgedfroman addressto the PhilippineStudyGroup of Chicago on Feb-
ruary3, 1973,South Asia Lounge,University of Chicago.The author acknowl-
edgeshis indebtedness to the membersof the PhilippineStudyGroup of Chicago
for theircriticismand suggestions as well as theirmoral and materialsupport.
The authoralso wishesto thankNormanMadrid of Queens College,New York,
foran enlightening discussionof an earlierdraftof this paper despitehis dis-
agreement with some of the author'sideas.
1 H. J. Abaya,The UntoldPhilippineStory(Quezon City,1967),p. 83. Until 1969
the rateof exchangewas about fourpesos to a dollar.
2 F. C. Estrella,The DemocraticAnswerto the PhilippineAgrarianProblem(Ma-
nila, 1969).
3 Abaya,op. cit.,p. 89. Also note the PhilippineInformation Bulletin,Vol. I, No.
1, New York,January,1973,pp. 20f.
4 PhilippineJointLegislative-Executive Tax CommissionReport,1960, quoted in
A. Guerrero, PhilippineSocietyand Revolution(Manila,Philippines),p. 269.
49
50 SCIENCE AND SOCIETY
One of the mostoppressiveaspectsof Philippinesocietyis the

land tenuresystem.The 1970 and 1971 FAO reportsbased on both
the 1960 world census of agricultureand the Philippine census of
1960 give the followingstatistics.5The Philippineshas the second
highestrateoftenancyin Asia,withonly44.6 per centofall holdings
being owned by the holdersor in ownerlikepossession,639.9 per
centbeing rentedfromothersand the restbeing underotherforms
of tenure.Of the 2.17 millionholdingsin the Philippines,62.3 per
centare less than3 hectareseach and theycoveran area of 24.4 per
cent of the total. Only one per cent of all holdingsare at least 20
hectareseach and theycover 17.9 per cent of the total area. 1,042
holdings,or 0.05 per cent,are at least 200 hectareseach, but they
represent8.1 per cent of the total area.
Since the landlord collects as much as 50 per cent of the
harvestas rent,most tenantsare leftwith verylittlefor theirsub-
sistence.Their condition is furtheraggravatedby the practicesof
usury,price manipulation,menial service and tribute-taking. If
the landlord providesthe seedlings,fertilizers, pesticidesand the
like, he can inflatetheir prices,charge the tenants for them,and
therebyincrease his crop share. Consequently, the tenants'debts
pile up and are passed on to theirchildren.
Agriculturalworkers,particularlythoseemployedby the sugar
industry,suffereven more severe oppression and exploitation.
Accordingto a surveyby the Instituteof Philippine Culture in
1960,60 per centof thesugarplanterswere payinghalfor less than
the minimumwage.7Jose E. Locsin noted that of the 1.5 million
populationof the provinceof Negros Occidental,where the sugar
industryis concentrated, only 8,000 earn taxable income.8
A 1962 nutritionalsurveyfor the metropolitanManila area
5 Food and Agricultural Organization(U.N.) Reporton the 1960 World Censusof

Agriculture, Vol. I, Part C: "CensusResultsby Countries,"Rome, 1970,pp. 160-
164; Vol. II, Part B: "Analysisand InternationalComparisonof Results,"Rome,
1971,pp. 96, 104, 109, 111.
6 An ownerlikepossessionis one in which the legal owner does not collect his
share,i.e., the tenantenjoysall of the produce.Examplesare holdingswhich
are too unproductive forthe ownersto care about or holdingswhichinvolverisks
on the partof the legal ownersin collectingtheirshare.
7 J. R. Verdad,"The PhilippineCrisis,"Far East Reporter,New York,1973,p. 9.
8 Ibid., p. 9.
THE PHILIPPINE CONDITION 51
showsthat,on the basis of clinical analysisfornutritionaldeficien-

cies, the diet of only 27.32 per cent of the sample populationcould
be classifiedas "good," the restbeing fairor poor.9The correspond-
ing figureforNorthernLuzon, accordingto a similarsurveydone
in 1963,is 26.37 per cent.10Nutritionalsurveysin the Visayasreveal
thatthe averagefood intake thereis much more deficientthan in
Luzon.11The averageper capita food intake for the two regions,
forall major food categories,is only 65.9 per cent of the recom-
mendedallowances.12 For bothregionsthe intakeof protectivefoods
is in mostcaseslessthanone thirdof therecommendedallowances.13
The average per capita intake of milk and milk productsis 15.5
per centof therecommendedallowances.14
Althoughthe workersand peasants are the main productive
elementsof Philippine society,they sufferthe worstdeprivation.
In the metropolitanManila area manual workersand laborers,
togetherwithfarmers, fishermen, huntersand lumbermen,have an
averagedietaryrating of 61 per cent,the lowestamongall groups.15
The manual workers,laborersand farmers also show the lowest
averagedietaryratingin the CagayanValley-Bat anes region; in the
Ilocos-MountainProvince region the workersin the mines and
quarrieshave an averagedietaryratingof 58.8 per cent,the lowest
among all groups.16
The impactof malnutritionin the Philippinesis particularly
evidentamongchildren.It is knownthatmalnutritionweakensthe
body defensesagainstinfections.Studies have shown,for instance,
thatchildrensuffering fromproteindeficiencyfail to manufacture
9 "Nutritional Survey of Metropolitan Manila," Food and Nutrition Research Cen-

ter, Manila, Philippines, 1962, Table 2, p. 66.
10 This is a simple average of the data given in the following surveys: Nutritional
Surveyof the Cagayan Valley-Batanes Region, 1963, Table 2, p. 74, and Nutritional
Survey of Ilocos-Mountain Province Region, 1963, Table 2, p. 73. Both surveys
were conducted by the Food and Nutrition Research Center, Manila, Philippines.
11 C. R. Pascual, "Nutrition Problems and Programs in the Philippines, The Jour-
nal of Vitaminology,Vol. 14, March 5, 1968, p. 22.
12 Ibid., Table 2, p. 23.
13 Ibid., p. 22.
14 Ibid., Table 2, p. 23.
15 Nutritional Survey of Metropolitan Manila, op. cit., p. 40.
16 Nutritional Survey of Cagayan Valley-Batanes Region, op. cit., p. 50 and Nu-
tritional Survey of Ilocos-Mountain Province Region, op. cit., p. 47.
antibodiesagainstdiphtheriaor typhoid.17 Other studiesshow an

increasingnumberof diarrhealattacksand risingmortality withthe
worsening level of malnutrition.18Considering that 69.2 per cent
of Filipino children in the age group 1 to 4 years are under-
nourished,10 it is no surprisethat the mortalityrate for Filipino
childrenis extremelyhigh. The mortalityrate for this age group
among Filipino childrenis 13.4 timesthatof Sweden20or 11 times
thatof the United States.21The reporteddeathsfromthisage group
in 1969 constituted16.3 per cent of the country'sdeaths for that
year despite the fact that these childrenaccounted for only 13.6
per cent of the total population.22A report from the Southern
Hospital in Cebu provinceshows that out of the 1,800 pediatrie
cases admittedtherein 1971,90 per cent were knownto be under-
nourished.23Furthermore,children who are undernourishedare
more subject to chronicdiseases and parasitism.It is known,for
instance,that92 per cent of Filipino childrensufferfromintestinal
parasitismand 74 per cent of preschoolershave anemia.24Those
who are severelyundernourished but who neverthelesssurvivecarry
the imprintof malnutritionand end up as undersizedadults or
showmarkeddeficiency in theirlearningprogress.25
Thus, the vast majorityof the Filipino people are under-
nourishedand the workers,the peasantsand their childrenbear
the full impactof malnutrition.Philippine societyis incapable of
providingeven the basic medical servicesto cope with the increas-
ing incidenceof diseasesresultingfromgeneralmalnutrition. Again,
17 E. S. Quiogue,et al, "SummaryResultsof the Eight Regional NutritionalSur-
veysConductedin the Philippinesby the Food and NutritionResearchCenter,"
PhilippineJournalNutrition,22(2): 61, 1961,quoted in J. Bulatao-Jayme, et al,.
"Implicationsof Malnutritionin PreschoolChildren,"Food and NutritionRe-
searchCenter,Manila, Philippines,1972,p. 2.
18 N. K. Ordway,"DiarrhealDiseasesand Their Control,"Bulletin,WHO, 23: 73, 1960,
and "Malnutrition and Diseases,"FFHC Basic StudyNo. 12,WHO, Geneva,1963;
both cited in Bulatao-Jayme, et al, op. cit.,p. 3.
19 Bulatao-Jayme, et al, op. cit.,Table III, p. 6.
20 Ibid., p. 3.
21 C R. Pascual,NutritionalStatusin the Philippines(Abstract), Food and Nutri-
tionResearchCenter,Manila,Philippines, 1972,p. 2.
22 PhilippinesHealth Statistics,1969, Diseases IntelligenceCenter,Departmentof
Health, Manila, Philippines,quoted in Bulatao-Jayme, et. al, op. cit., p. 3.
23 Pascual,op. cit.,p. 3.
24 Bulatao-Jayme, op, cit.,p. 1.
25 Ibid., p. 5 and Table VIU, p. 13.
referringto the condition of the people of Negros Occidental,

Locsin said: "In a provincewiththe largestsugarcentrals,the most
productiveplantations,and many cities and prosperoustowns,it
is a sad commentary thatout of 100 personsburied,70 receiveno
medical assistance/'26
The ratio of the population to the numberof doctorsin the
Philippines,accordingto the 1965 World Health StatisticsAnnual,
was 1,333to one, about twicethatof the United States,which was
530.27-phisratio is misleadingsince the unevendevelopmentof the
Philippineeconomyfailsto make theruralareas,where65 per cent
of the people live,28as invitingto the doctorsas the cities.A doctor
who has devoted9 yearsof his life and a good part of his parents'
incometo the studyof medicinecannot be expectedto practicein
the ruralareas whichcannotoffereven the minimumconditionfor
a decentexistence,let alone providethe essentialmedical facilities,
and wherethe people, in general,are not able to pay for medical
services.Even assumingthatthereare doctorswho have a social con-
scienceand are willingto make occasionalvisitsto the rural areas,
the taskis made moredifficult not onlyby the lack of transportation
facilitiesbut also by a governmentsuspiciousof people who tryto
help themasses.During thegreatfloodsof 1972,forinstance,young
doctorsfromManila triedto help the victimsof CentralLuzon but
theywere harassedand branded as subversivesby the authorities.
Fortunately, lack of evidenceand severepublic criticismcompelled
theauthoritiesto retreat.
The claim of universaleducation in the Philippines is false.
The meagerincome of the peasantscompels many of them to re-
quire theirchildrento work on the farmsratherthan send them
to school. Of the 18 million Filipinos 10 yearsof age or older in
1960, at least four million had not completedany grade at all.29
26 Philippines Free Press, April 26, 1969,cited in Verdad, op. cit., p. 9.

27 Computed from data supplied by the World Health StatisticsAnnual, 1965, Vol.
3: "Health Personnel and Hospital Establishments," WHO, Geneva, quoted in
T. D. Dublin, '"Migration of Physicians to the United States" New England Jour-
nal of Medicine, Vol. 286, No. 16, April 20, 1972, p. 872.
28 Philippine Information Bulletin, op. cit., p. 21.
29 The figurescited here are based on the data on pp. 12-13 of the Summary Re-
port of the 1960 Census of the Philippines, Vol. II. Statistics on education as
well as crime and poverty in the Philippines are also found in the Philippine
Information Bulletin, op. cit., pp. 20-21.
Among the 11 million who were at least 20 yearsof age, only 1.5
million had completeda high school education.With the present
distributionof the national income,no more than fourper cent of
Filipino familiescan reasonablyexpectto providecollege education
fortheirchildren.
Yet it is generallyconceded that in termsof raw materialre-
sourcesthe Philippinesis among the richestnations in the world
today.The British,the Swissand the Japanesehave no naturalre-
sourcesto speak of, but theyare far richer.The Swiss,Abaya ob-
serves,can buy 10 centsworthof steel and make $10,000 worthof
watch springsout of it. The Japanesecan buy a ton of iron ore
fromus for$10 and convertit into intricatesteelmachineryworth
$3,000. Our undeveloped productiveforcesare the basis of our
chronicunfavorablebalance of trade.Our exports,consistingmainly
of raw materials,commandan insignificant pricerelativeto the ex-
pensivefinishedgoods thatwe have to import.
Underdevelopment of our productiveforcesand improperuti-
lization of our natural resourceshave forcedidleness on a large
portionof our people. Accordingto the PhilippineStatisticalSurvey
of Households in 1965,of the estimatedlabor forceof 11.2 to 11.8
million,918,000to 967,000were unemployedand 1.8 to 1.9 million
were underemployed, i.e., workingabout half the time.30Further-
more,extrapolatingfromavailable data, we estimatethat,in addi-
tion to the unemployedand underemployedlabor force,thereare
about 8.6 millionfarmersand membersof theirfamilieshelpingin
farmoperationswho workonlyfourmonthsout of theyear.Assum-
ing that a man could work fivedays a week at P8 per day, this
unutilizedlabor forcemeansa loss of PI 5.5 billion everyyear.This
impliesthatsince 1965 we have lost the staggering amountof PI 24
billion! This amount is even a gross underestimate,for the un-
utilizedlabor forcehas expanded since then and the currentmini-
mum wage of P8 per day representsmerelythe cost of subsistence
forthe worker.
Further,the backwardnessof the Philippine economycompels
many of the highlytrainedor highlyskilled Filipinos to migrate
to the moreadvancedcountries.The InternationalLabor Organiza-
tion reportedthat,presumablyin termsof the resourcesdevotedto
30 Ibid., p. 88.
THE PHILIPPINECONDITION 55
theirtraining, the Philippineshad lost $157 millionin thisway
as of 1970.31This estimate,ofcourse,doesnottakeintoaccountthe
potentialcapacity producematerialvalues thatis lost or the
to
potentialservices thathavebeendeniedto theFilipinopeopleas a
resultofsuchmigration. Whilemillionsof Filipinosneedthemost
basic medicalattention, the Philippinesleads all othercountries
as a sourceof foreignmedicalgraduatesforthe UnitedStates.32
As of December31, 1970,therewere7,261Filipinodoctorsin the
UnitedStates.33 The Philippines is also theleadingsourceof immi-
grantphysicians entering the United States.34From1968 to 1970,
2,261Filipinophysicians migrated to the United States.35
With the suppression of the newsmedia undermartiallaw
some28,000morepeoplejoinedtheranksoftheunemployed.36 The
generalanxiety amonginvestors createdbythedeclaration ofmartial
law further the
aggravated unemployment situation while the im-
positionof a curfew decreased the earnings of certainworkers,such
as cab drivers.Martiallaw also compelledsome highlytrained
Filipinosto live in exile in foreigncountries or go underground.
Thus, the mainsourcesof the miseryof the Filipinopeople
areunderdevelopment and theunequaldistribution of thenational
income.Unfortunately, neitherindustrialization nora moreequita-
ble distributionof the nationalincomeis possibleunderexisting
conditions,whichin effectprolongour colonialpast. There are
however.
differences,
The increasing demandof thesubjectpeoplesforself-govern-
mentand nationalindependence combinedwiththearmedstruggle
fornationalliberationin manyplaceshas convincedthe colonial
powersthat it was neitherconvenientnor necessaryto rule a
colonydirectly. With the grantingof shamindependence to the
31 Manila Chronicle, August 18, 1972.
32 Dublin, op. cit., p. 873.
33 Foreign Medical Graduates in the United States, 1970, Center for Health Serv-
ices Research and Development, American Medical Association, Chicago, 1971,
quoted in Dublin, op. cit., p. 873.
34 Dublin, op. cit., Table 3, p. 872.
35 Immigration and Naturalization Service, U.S. Department of Justice, quoted in
Dublin, op. cit., p. 872.
36 Far East Economic Review, quoted in Liberation (published by the Underground
Resistance Against the U.S.-Marcos Dictatorship), Vol. 1, No. 7, December 7,
1972, p. 6.
Philippines,the United States embarkedon a new imperialism

wherepoliticalannexationof a colonywas avoided but wherepoliti-
cal, economic and militarydominationwere effectedthroughthe
local ruling classes. The other colonial powers followedsuit and
the old colonies became neocolonies.This is the centralfeatureof
the Philippinesituation.
The United Stateshas been interestedin the Philippinesnot
onlyas a sourceof cheap raw materialsand labor, as a fieldforin-
vestments and as a marketforAmericangoods,but,moreimportant,
as a strategicfootholdforthe protectionand expansionof American
interestsin Asia and the Pacific.The recentstatementmade by Am-
bassador Byroade before the Americandelegationto the Interna-
tional Conferenceon Social Welfareheld in Manila in September,
1970,as reportedby Abayay,37 is emphaticon thispoint:
The U.S. positionhereis verystrong.They have nothingto worry

about.The big basesat Clarkand Cubi Pointare precisely intendedto
protect Americans and American interests not only in the Philippines
but in thispartof theworldas well.This holdstruefortheotherbases
in the area. . . .
The U.S. is notpullingout ofAsia.. . . Andno powercan keep the
U.S. out of Asia.
The same note was echoed in Manila by AssistantSecretaryof State

MarshallGreen whenhe said: "It is not our intentionto get out of
Asia but to findthe rightway to stayin Asia."38
No foreignpower can maintaincontrolover a countryfor a
long period of timewithoutthe effective collaborationof local ele-
mentswho have adequate influence.When the Spaniardscolonized
the Philippinestheysoughtthe cooperationof the local chiefsand
incorporatedthem into the colonial bureaucracyto do the chores
forthecolonialofficials.
The administration of the townsand barrios
were entrustedto the local chiefs,under the meticulouseyesof the
friars,of course,and theywere amplyrewardedfor theirservices.
Their main duties were the collectionof tributeand the enforce-
mentof corvéelabor. In thecourseof timetheyaccumulatedwealth,
principallyland, and, togetherwith the colonial officialsand the
37 H. Abaya, "Super-Justiceforthe Yanqui," Graphic,Manila, January,1971.
38 Philippine Times, Chicago, 111.,March 15, 1972.
Catholicreligiousorders,theyformedthe landlordclass and became

the dominantlocal political force in the Philippines during the
Spanishcolonial period. When the United Statesseized the Philip-
pines,thelandlordclassbecamethe logicalbase ofpowerforthenew
colonizers.The Treaty of Paris clearlyrecognizedthis,forit guar-
anteedthepropertyand businessrightsof Spanishcitizenswho were
thenthe principallandowners.
Aftertheoutbreakof the Philippine-American War the process
of consolidationof controlby the United Statesbegan. A certain
David P. Barrowsmade a trip to the Philippinesnot only to assist
in the establishment of the school systembut also to spot potential
collaborators.He identifiedthe "gente ilustrada" or upper class
whosemembers,he said, had wealth,lived in handsomehouses,had
verygreatsocial influenceand were "keenlyambitious-ambitious
foreducation,ambitiousforparticipationin the political affairsof
the islands."39This class included landlords and compradors,as
well as theeducatedwho normallycame fromlandlordor comprador
families.Barrowsalso noted that this class possessedgreat power
over the lower class, that the membersof the latterdid what the
"genteilustrada"told or influencedthemto do, and thata man of
the "gente ilustrada"could claim the serviceson special occasions
of a large numberof "hombres"or "gentebaja," the lower class.40
Barrowsestimatedthat therewere about eight familiesbelonging
to theupperclassin each townof some ten thousandpeople. One of
themostimportantattributes ofthisclass,as faras thenew colonizers
were concerned,was its politicalattitude.Barrowsreportedhis ob-
servationto the said Senate committee:"I thinkthe feelingof this
class,whichis reallythe only class we have to consider,has under-
goneseveralchangessincetheAmericanoccupation."41 The changes
referto thefactthatthisclasshad supportedtherevolutionary forces
earlierbut,sensingthe eventualdefeatof the latter,theywere now
ready to embracethe new rulers.As an indication,Barrowsmen-
tionedthatas earlyas February,1901 thisclass alreadyparticipated
in the celebrationof Washington'sbirthday.Prominentelementsof
39 H. F. Graff, AmericanImperialismand the PhilippineInsurrection(Boston,1969),

pp. 159-160.
40 Graff, op. cit.,pp. 161-163.
41 Ibid., p. 160. The emphasison this class alreadysuggeststhe intentionof the
UnitedStatesto set up an oligarchyin the Philippines.
this class formedthe Federal Party,42 which advocated American

statehoodfor the Philippines,an idea laughed offeven by Ameri-
'
cans as a well-intentioned of *'oneness' with
joke.43The protestation
theAmericansby the membersof thispartyqualifiedthemforposi-
tionsin thecolonial bureaucracy44and allowed themto sharein the
Thus the Federal Partysup-
spoils of the colonial administration.
plied the loyal bureaucratsneeded by the colonial administration
and providedthe firstgroup of bureaucrat-capitalists45during the
Americanregime.When the partybecame too discreditedthe Na-
cionalistaPartyand the Liberal Partywere allowed to take turns
in runningthe colonial bureaucracy.They both adopted nationalist
sloganswhile doing thechoresforU.S. imperialism.
Since the beginningof the U.S. colonial occupation of the
Philippinesthe alliance of these forces-the U.S. imperialists,the
landlords,the compradorsand the bureaucrat-capitalists- has been
thedominantfeatureof Philippinesociety.They constituteless than
one per cent of the population,yettheyown the lion's shareof the
country'swealth.With theirvast economicpower theyare able to
wield complete political control over the entire country.Their
agentscontrolthevariousagenciesand unitsof thegovernment from
the highestlevel down to the barrios.Electionsare shams,for the
electoralprocessis controlledby the ruling classes and the candi-
dates are determinedby, and receivecampaignfundsfrom,them.
Electionsserve as a smokescreenfor oligarchicrule and fosterthe
illusionthatthe people have politicalpower.
To enhance the processof political dominationthe colonial
administrationimmediatelyorganized the Philippine educational
systemwithAmericansoldiersposingas teachers.It servedas part
of the pacificationprogramduringthe earlyyearsof the American
occupation.It was only in recentyears,with the rise of student
activism,that the Filipino studentbegan to learn more about his
countryby participatingin the parliamentsof the streets.
The processof politicalconsolidationby the colonial adminis-
42 The party was founded by Trinidad Pardo de Tavera. For a list of the promi-
nent members see Agoncillo, op. cit., p. 160.
43 T. A. Agoncillo, A Short History of the Philippines (New York, 1969), p. 160.
44 Ibid.
45 The term refers to the fact that these bureaucrats accumulated wealth by turn-
ing the governmentofficesinto their private firms.
trationincludedthesendingof a largenumberof students to the

UnitedStatesforadvanceddegrees,particularly duringthe period
from1903to 1914.At thesametime,theUniversity of thePhilip-
pines was created in 1908 to provide advanced training in thevari-
ous professions.The productsof bothprograms became thedomi-
nantfigures in thepoliticaland economiclifeof thecountry and
theirinfluence wasfeltnotonlyin thegovernment but also in the
educationalinstitutions and the newsmedia.Since the graduates
identifiedtheirindebtedness to U.S. imperialism withthatof the
entireFilipinopeople,theybecameeffective tools in promoting
American interests,
including theconsolidation ofAmerican control.
By 1935an adequatelocal leadershipso subservient to American
hadbeendevelopedthatthegranting
interests ofnominalindepend-
encebecamefeasible.A colonialconstitution was adoptedwiththe
approvalof President FranklinRooseveltwhichpavedthewayfor
thegranting ofshamindependence to thePhilippines in 1946.
Since1946themythof independence has blurredthevisionof
theFilipinopeople.TherewasmucheuphoriawhentheAmerican
flagwasloweredon July4, 1946to givewayto thePhilippineflag.
Behindtheformalproclamation of independence was a deepening
economicdependence whichrenderedmeaningless any promiseof
politicalindependence contained in the document. As pointedout
byCommisioner Paul V. McNuttat thetime,thePhilippineecon-
omywas dependenton theUnitedStatesto a greaterdegreethan
anysinglestateof theunionis economically dependent on therest
oftheUnitedStates.46
Gradually, theeuphoriadisappeared andthegrimreality caught
up with us. Nationalist feelinggathered momentum untilit even-
tuallyexplodedinto the greatrallies and demonstrations of 1964
againstU.S. imperialism. Sincethenthenationalist movement has
maturedintothenational-democratic strugglewhich has now mobi-
lizedtheprogressive ofPhilippine
sectors Aftertheestablish-
society.
mentof the KabataangMakabayan(NationalistYouth) in 1964
hundredsof otherorganizations emergedand formedthe alliance
calledtheMovement fora Democratic Philippines.
Evenbeforeindependence was formally grantedto thePhilip-
pinesin 1946,itssubstancewas alreadydeniedherwhenthe U.S.
46 G. E. Taylor,The Philippinesand the UnitedStates(NewYork,1964),pp. 124-125.
Congresspassed the Bell Trade Act. The Act required the Parity
Amendmentin the Philippineconstitutionto enable U.S. monopo-
lies to exploitour naturalresourceswiththesamerightsas Filipinos,
and to operatepublic utilities.It also prolongedfreetraderelations
betweenthe two countriesand tied the Philippinecurrencyto the
dollar. Senator Harold Knutson described the Act as "a pistol
pointed at the Filipino's head" to compel him to accept its pro-
visions.47To ensure acceptance of this onerous arrangementby
the Filipinos,the U.S. Congresspassed companionlegislation-the
PhilippineRehabilitationAct of 1946,whichprovidedforthe pay-
mentofwarlossessuffered by theFilipinosduringtheSecondWorld
War.48The Act includeda provisionwhichprohibitedthe payment
of privatewar damagesto any claimantin excessof $500 until we
adopted,in a nationalplebisciteaftera concurringresolutionby our
Congress,the ParityAmendmentto the constitution.49 The Philip-
pine CongressapprovedtheBell Trade Act in an undisguisedbid for
moreU.S. financialand militaryassistance.50 There was considerable
opposition then in the Congress but the required "three-fourths"
majorityneeded foracceptanceof theActwas attainedby thesimple
expedientofoustingsomeopponentsof theActand notcountingthe
seats theyleft vacant.51The Filipinos, in a national plebiscite,in
whichtwo-thirds of the votersstayedawayfromthe polls in a silent
but eloquent protest,votedto accepttheAct.52There was no choice
then. The Filipinos needed the war damage paymentsbecause the
U.S. militaryoperationsagainsttheJapanesein the Philippineshad
leftthecountryin ruins.
The Bell Trade Act was latersupersededby the Laurel-Langley
Agreement, whichnot onlyreiterates but also extends"parityrights"
to all kindsof business.
During the presidentialelectionsof 1946 in the Philippinesthe
United States,throughGen. Douglas MacArthur,saw fitto support
the candidacyof Manuel Roxas for President.Roxas had a long
recordof pro-Japanese collaborationduringthe SecondWorld War.
47 Abaya,op. cit.,p. 25.

48 Taylor,op.cit.,p. 126.
49 Abaya,op. cit.,p. 43.
50 Ibid.,p. 25.
51 Ibid.,p. 22.
52 Ibid.,p. 25.
Yet when 5,500 alleged collaborators,includingthe top officialsof

the pro-Japanese puppet PhilippineRepublic, were indicted,Roxas
could not be included; the chiefprosecutorfound thateveryshred
of evidenceagainsthim in the U.S. Counter-Intelligence Corps files
had been suppressed.53Roxas won theelection,and withthecloud of
collaborationhauntinghim he became an effective tool forthe pro-
motionof Americaninterests.When he died, a year afterhis elec-
tion,he had alreadysigneda numberof agreements withthe United
States,includingthePropertyAct,the Bell Trade Act,the U.S.-R.P.
MilitaryBasesAgreementand the U.S.-R.P. MilitaryAssistancePact.
The Property Act providedthatreal estateand propertyacquired by
the U.S. governmentor its agenciesbeforeand afterJuly4, 1946
would be respected.54
On the day nominal independencewas grantedto the Philip-
pines,PresidentRoxas signedthe U.S.-R.P. Treaty of General Re-
lations,which effectively nullifiedPhilippine independence.This
Treatyempowersthe U.S. governmentto retainsupremeauthority
over extensivemilitarybases, which can be extendedat will, and
guaranteedtheproperty rightsof U.S. corporationsand citizens.
Under the MilitaryBases Agreementthe United Statessecured
a ninety-nineyear agreementprovidingfor 23 army,navy or air
forcebases at variouspointsin the Philippinesand the rightto use
partof the Manila portarea on the same basis as any privateprop-
erty.55The Subie Naval Base and Clark Air Base alone covera total
area of 166,000acresand capital investments in thesetwo bases total
$387 million.56
Aside from the bases thereare extensiveareas being
used by theVoice ofAmerica,satellitetrackingstations,and airfields
whichare outsideof U.S. militarybases but under directU.S. con-
trol.57In 1954,accordingto thePentagonPapers,58thereweresecret
53 H. J. Abaya,Betrayalin the Philippines(reprint)(Quezon City, 1970), p. 256.
Abayaalso discussesthe stepstakenby MacArthurto build up Roxas politically.
54 Guerrero, op. cit.,p. 64.
55 Agreement Betweenthe Republic of the Philippinesand the UnitedStatesCon-
cerningMilitaryBases, Departmentof ForeignAffairs Treaty Series,Vol. I, De-
on the U.S. mili-
cember,1948,quoted in Taylor,op. cit.,p. 128. More statistics
tarypresence in the are
Philippines found in Korea and the Philippines,a staff
reportpreparedforthe use of the Committeeon ForeignRelations,U.S. Senate,
February18, 1943,pp. 40-42.
56 Korea and the Philippines,op. cit.,p. 40.
57 Ibid.,pp. 40-42.
58 N. Sheehan,et al, The PentagonPapers(NewYork,1971),pp. 54-66.
areas in the Philippines designated and used by the CIA for the
training of Filipino and Vietnamese counter-insurgencyoutfitsem-
ployed in Vietnam. President Magsaysay himself supported Col.
Edward Lansdale's clandestine operations in Vietnam which in-
cluded sabotage of Hanoi's railroad, contamination of its oil supply
for the purpose of wrecking the motors of Hanoi's trucks,etc., and
the distribution of fake Vietminh leaflets to encourage refugees
to flee from North Vietnam.59Aside from sending Filipinos there,
he allowed Vietnamese officersto be trained with the Palace guards
in Manila.60
The U.S.-R.P. Military Assistance Pact provides for continued
control of the local armed forces through the Joint United States
Military Advisory Group (JUSMAG). U.S. militarycontrol extends
to the local police forces as well. Since 1966 there has been massive
reorganization and expansion of the local police agencies under the
guidance of the Agency for International Development's Public
SafetyDivision (PSD). We quote a portion of Michael Klare's recent
report on the subject61:
A little publicizedgroup of U.S. governmentdocumentsrevealsthat

the United States has taken part, everystep of the way,in the creation
of a police state in the Philippines.
In establishingmartial law and carryingout mass arrestsagainst
all political factionswho oppose him, Ferdinand Marcos has relied on
police trainedand equipped by the United States.Today, U.S. advisers,
many of whom worked at similar jobs in South Vietnam, are in daily
contact with the commandersof the Philippine police.
Soon afterhe took officein 1966, Marcos began searchingfor ways
to improvethe capacityof Philippine police agenciesto controland sup-
press insurgentpolitical movements,including student groups, labor
unions and peasant organizations.
One of his firstacts on April 12, 1966, was to meet with the U.S.
Ambassador,the head of the U.S. Agency for International Develop-
ment mission and the directorof AID's Public SafetyDivision. It was
agreed that the Public SafetyDivision would conduct a three-months
59 Ibid.
60 Ibid.
61 M. Klare, "U.S. Role in Building PhilippinePolice State," Chicago Sun-Times,
November15, 1972.
operationsin the Philippines,leadingto a

surveyof law enforcement
plan fora programto upgradethe Philippinepolice.
U.S.-backed
Accordingto the same report,trainingcenters,police agencies

and special and para-militaryforceswere createdand equipped by
AID withcomputersand moderncommunicationscenters.USAID
fundsare beingused to installa nationwideLaw Enforcement Com-
municationsSystemto link provincialand municipalpolice agencies
withthe centralpolice apparatusin Manila. One significant provi-
sion of the MilitaryAssistancePact is the requirementthat the
Philippines purchase the bulk of its militaryequipment in the
UnitedStatesand secureU.S. approvalforpurchasesto be made else-
where.62This provisiongives the United Statesconsiderableinflu-
ence over the size and characterof the Philippine militaryforces.
Our economicand militarydependenceon the United States
leaves us with no leeway for independentforeignand domestic
policy.For one thing,our leadersowed theirrise to powerto Ameri-
can interestsand theirlocal allies and, once in power,theyneeded
Americandollars and arms to keep them there.Thus our Depart-
mentof ForeignAffairshas alwaysbeen a shadowof the U.S. State
Department.We displayeda tightadherenceto the U.S. contain-
mentpolicytowardChina and we oftenmade provocativestatements
as if we werea superpowertoo. We interfered in the internalaffairs
of the Vietnamesepeople because the United Stateswantedus to.63
We sent troopsto Korea and Vietnam "to defendfreedom."How-
ever,when the Dutch seized controlof Indonesia,our neighbor,we
did not raise our voice in protest,as did the restof Asia, because
the United Statessided withthe Dutch.
Perhaps our subservienceto American interestsreached its
apogee,beforethe presentregime,duringthe presidencyof Ramon
Magsaysay. At thattime,theCIA EdwardLansdale and U.S. Embassy
CounsellorWilliam Lacy screenedPalace callersand gave Magsaysay
dailycounsel.64
62 Taylor, op. cit., p. 129.
63 The Philippines sent mercenary forces to Vietnam in consideration of a secret
payment made by the United States to the Philippine government(Parade, July
20, 1970). Earlier, on a cue from the CIA's Edward Lansdale and William Lacy,
President Magsaysay hastily recognized the government of Ngo Dinh Diem in
South Vietnam (Abaya, Betrayal, op. cit., p. 287).
64 Abaya, Betrayal, op. cit., p. 287.
George Taylor, an experton U.S. foreignpolicy,explains the

role of the Philippinesin the global contextof U.S. imperialism65:
The PhilippineRepublicis an essentialmemberof thesystem ofmutual

securitypacts and of U.S. regionalsecurityarrangements Southeast
for
Asia,as wellas a prominent memberof theUnitedNations.The Philip-
pinesis a stagingarea foroperations Asia,a centerforU.S.
in Southeast
air forces,a sitefornaval bases.The Philippinesis also of continuing
economicimportance a marketforAmer-
as a sourceof raw materials,
ican products,and a fieldforAmericaninvestments. The viabilityof
its economyis a matterof bothpoliticaland economicconcernto the
UnitedStates.
Regardingthe extensiveassistancethe United States is giving to

friendlycountries,Taylor explainsthatit is intended,amongother
things,"to develop their resourcesin the interestof the United
States'' and that the Agency for InternationalDevelopmentis a
major instrument of foreignpolicy.66
As indicatorsof the "fruitfulness" of Americanpolicy in the
Philippines,we cite some businessstatistics.
At present,U.S. monopoliescontrolthe oil, tire,rubber,drugs,
fertilizers,
chemicals,mining,heavyequipmentmarketing, transport
facilitiesand other industries.67As of 1970, Americaninvestments
accountedfor77.62 per centof all foreigninvestments in the Philip-
pines and 91.62 per centof thetotalnet profits.68
Accordingto the Philippine Times, of the 196 foreigntop in-
dividual incometaxpayersin the Philipines,117 are Americansand
the restare British,(Kuomintang)Chinese,Spanish and otherna-
tionalities.Of the top ten individualincometaxpayersin the coun-
try,fiveare Americansand fiveare Spanish.Of the top 20 taxpayers,
onlyfourFilipinosmade the grade.69The per capita holdingin the
Philippinesis somethinglike 20 to 1 in favorof aliens and against
Filipinos.70
65 Taylor,op. cit.,p. 4.
66 Ibid., pp. 5-6.
67 See the Manila Chronicleseriesof reportson the U.S. and Japaneseenterprises
in the Philippines,November22-23,1971.
68 Manila Chronicle,November22, 1971,p. 8.
69 PhilippineTimes,Chicago,111.,March15, 1972.
70 Abaya,The UntoldPhilippineStory,op. cit.,p. 84.
The PhilippineSecurities and ExchangeCommision estimated

thatthereare 800 U.S. companieswithinvestments in the Philip-
pines.71 Their combined assets totalat least$2 billion,72 although
it wassuggested by theNew York Times thatthe value ofAmerican
assetsin thePhilippines wouldbe closerto $3 billionifdetermined
at currentprices.73 One hundredsixty-six of thesefirms alone had
combinedassetsof P6.798billionin 1970and earneda netincome
of P613 millionthatyear,accordingto a studypublishedby the
Manila Chroniclein November, 1971.74The tablebelow,basedon
the Chroniclestudy,showsthe top two businessachieversin the
Philippines fortheindicatedcategories. Note thatJapan,beingthe
juniorimperialist partner theUnitedStatesin Asia,is notbehind
of
in theexploitation oftheFilipinopeople.We couldnotincludein
thetableone foreign bankwhoserateofreturnon invested capital
is infinitybecauseitbrought in no capitalat all.75
It is notonlythemagnitude but also thestrategic positionof
U.S. businessthatweighsheavilyon the Filipinopeople.By con-
trollingthe oil industry alone,whichsupplies90 per centof our
energy needs, the oil cartelis able to controlnumerousothercom-
modities to or
transported processed in thePhilippines.
According to variousstudies76 theoil cartelreapssuperprofits
at eachstagein itsvertically integrated industry.For all companies
in the MiddleEast,averageindividualprofits from1958 to 1960
56
equaled per cent of individual net assets,accordingto the U.S.
Department of Commerce, or 66 per cent on the averagefrom1956
to 1960,according totheArthur D. LittleManagement firm.77 Huge
profitsalsocomefromtheshipment ofcrudeoil,since40 percentof
theworld'stankersbelongto the carteland mostof the restare
71 New York Times, September 26, 1972.

72 Malaya Research, "Sizing Up American Economic Interests,"Philippine Informa-
tion Bulletin, Vol. I, No. 1, January, 1973.
73 New York Times, September 26, 1972.
74 Manila Chronicle, November 23, 1971, p. 10.
75 Abaya, The Untold Philippine Story,op. cit., p. 350.
76 See H. O'Connor, World Crisis in Oil (New York, 1962); Philippine Senate Re-
port, op, cit.; and Samahan ng mga Makabayang Siyentipiko,"The Oil Problem
in the Philippines" (monograph), Quezon City, 1971.
77 H. J. Frank, Crude Oil Pricing in the Middle East (New York, 1966), quoted by
Samahan ng mga Makabayang Siyentipiko,op. cit., p. 3.
The Business Achievers
Company Nationality (million)

The Leaders in Invested Capital
Caltex Philippines, Inc. American P339.25
Benguet Consolidated American 302.22
The Leaders in Assets
Iligan Integrated Steel Mills Japanese 789.55
First National City Bank American 712.75
The Leaders in Sales
Caltex Philippines, Inc. American 481.10
Shell Philippines, Inc. British 394.34
The Leaders in Net Income
Atlas Consolidated Mining American 140.44
Marcopper Mining Corp. American-Canadian 97.27
Company or
Type of Business Nationality Rate of Return
The Leaders in Return on Invested Capital
Mitsui & Company Japanese 23,915.58%
Otis Elevator Company American 236.27%
The Leaders in Sales
J. P. Heilbronn Company American 67.07%
Insurance Specialists American 47.78%
The Leaders in Return on Assets
Mitsui & Company Japanese 140.91%
Insurance Specialists American 47.78%
The Leaders in Return on Equity
Mining Firms American 43.78%
American CosmeticsFirms American 44.32%
charteredby it.78We have seen earlierthattheratesof profitsof the

subsidiariesin the Philippinesare severaltimesthe corresponding
ratesenjoyedbysimilarsubsidiariesin the United States.
These superprofits notwithstanding,the oil cartelcontinuesto
78 M. Tänzer, The PoliticalEconomyof InternationalOil and the Underdeveloped

Countries(Boston,1969),quoted by Samahanng mga MakabayangSiyentipiko,
op.
cit.,p. 3.
THE PHILIPPINECONDITION 67
raisethepriceofgasolinewiththeblessings ofthePhilippine govern-
ment.This resultedin thetransportation strikes of 1970and 1971,
whichcauseddeathand injurytoso manyofourpeople.
The preferential and tradequotasystem ostensiblyintendedto
benefitthePhilippineeconomy only servesto perpetuate itscolonial
and agrariancharacter. Free tradehas favoredthe UnitedStates
morethanthePhilippines. At theheightof freetrade,underthe
Bell Trade Act from1946to 1954,the UnitedStatesexportedto
thePhilippines $2 billionworthof goodsduty-free and the latter
exported to theformer only$889 million worth of goodsduty-free.70
The Philippiners exports,consisting mainlyofrawmaterials, do not
earnenoughdollarsto payfortheimportation of foreign manufac-
tureswhichcommandhigherprices.As of 1968,only8.3 per cent
ofPhilippineexportscouldbe categorized as manufactured goods.80
The Philippineeconomy is so unevenand distorted that,despiteits
agrariancharacter and thefavorable tropicalPhilippineclimate,we
haveto importsuchagricultural productsas oranges,poultryand
dairyproducts, cerealsand cerealproducts. The resulthas beenour
chronicdeficitin foreign trade.81
One of themostmisleading issuesin the Philippinestodayis
thequestionof theroleof foreign investments, particularly Ameri-
can investments, in our development. We have been brainwashed
intothinking thatwehaveno capital,thatwecannotsurvive without
the U.S. dollarand that,since politicalpowerand influencego
withthedollar,we mustcontinueto tradeour sovereignty and free-
domforU.S. domination. Our main thesisin thispaper thatthe
is
U.S. economic,hencepolitical,domination of the Philippineshas
suppressed our development notonlybecauseit has deprivedus of
theneededsurplusforindustrialization but also becauseit has cre-
ateda powerstructure whichhas resisted changeand has deprived
thebroadmassesofour peopletherightto a decentlife.
As earlyas 1948Dr. HarryOshimafoundthatour potential
economicsurpluswas25 percentof our GrossNationalProduct,82
79 Guerrero, op. cit.,p. 139.

80 Ibid, p. 139.
81 Statisticson tradedeficitsare foundin Guerrero,op. cit.,p. 140; Korea and the
Philippines,op. cit.,p. 34 and PhilippineInformationBulletin,op. cit., p. 12.
82 Citedin Paul Baran,The PoliticalEconomyof Growth(New York,1957),p. 227.
whichwas then at least $3 billion,83and that grossinvestmentac-

countedforonly9 per cent.Consideringthatour GNP in 1964 was
already$4.4 billion84our potentialeconomicsurplusshould now be
substantial.Yet we findourselvesin greaterforeignindebtedness.
The reason is thatpart of our economicsurplusleaves the country
in the formof profitremittances by foreignfirms, or in the formof
in
deposits foreign banks by local while the
bureaucrat-capitalists,
restis controlledby people who have no interestin developingPhil-
ippine resources.
A studypreparedby DirectorB. G. Bantegui of the Officeof
StatisticalCoordinationand Standards (OSCAS) for the National
Economic Council (NEC) revealsthatfrom1956 to 1965, 108 U.S.
firmsrepresenting 70 per cent of total U.S. investments in the 157
firmsin the countryused $489.6 million in new funds,of which
$410.2 million, or 84 per cent, were fromlocal sources and only
$79.4 millionor 16 per cent,including$20.8 million or 4 per cent,
in reinvestedprofits,came fromthe United States.85The paid-up
capitalof thesefirmsamountedto only8 per centand inter-company
accounts,usually with theirparentor sistercompanies,amounted
to 4 per cent. Thus only a verysmall portionof new investments
came fromthe United States.
The operationsof the same 108 U.S. firmsduring the 10-year
periodresultedin theoutflowof$386.2 millionfromthe Philippines
againsta totalinflowfromthe U.S. of $79.4 million in investments,
of whichonly $58.7 million came directlyfromthe United States,
the balance being reinvestedprofits.86
Thus the net outflowduring
thatperiod was $306.8 million.CentralBank figuresalso show that
forthe period from1962 to 1968, therewas $173 million inflowof
foreigncapital but $408 million remittance.87 Salvador Araneta
observesthat for the period 1950-1960 the Philippinesreceived
83 Based on the fact that the PhilippineGNP in 1946 was already$3,228billion

(Reportand Recommendations of the JointPhilippine-AmericanFinance Com-
mission,Washington, D.C., June7, 1947).
84 F. H. Golay (ed.), The Philippinesand the UnitedStates,(EnglewoodCliffs,
N.J.,
1966),Table 1, p. 174.
85 "The Truth About U.S. Investments," PhilippineInformationBulletin,op. cit.,
pp. 9-13.
86 Ibid., p. 10.
87 Malaya Research,op. cit.,p. 6.
only$19.2 millionin foreigncapitalbut theremittances of earnings,

profitsand dividendsamountedto a lopsided $215.7 million.88
For a more effective utilizationof local resourcessome firms
enterinto allianceswithestablishedbanks.One schemeis forthese
banks to open local branches,accept depositsand grant loans to
favoredcustomers, usuallyforeignfirms.Thus in his keynotespeech
on February7, 1967 openingthe two-dayCongressof the Movement
for the Advancementof Nationalism (MAN) Senator Lorenzo
Tañada revealedthatthe Philippinebranchesof fourforeignbanks
recordedtotaldepositsof P369.57 millionas of December31, 1958.89
Significantly, he said, the recordshowed"that the loans grantedby
these banks, percentagewise, went more to financealien business
activitiesthan Filipino," and that the profitsof these banks were
remittedto theirhome offices abroad.90Anotherschemeis forthese
banks to affiliate withlocal banks by buyingsome stocks,and then
to influencecreditpolicies and grantloans to favoredcustomers-
again, usuallyforeignfirms.The advantageof this scheme,accord-
ing to David Rockefellerof Chase Manhattan Bank, is that "by
affiliating with a local institutionin a joint venturewhich retains
itslocal nameand management, we do notencounterthenationalistic
resentment whichis oftendirectedtowarda branchor sole owner-
ship of a local bank."91
In 1959 Senator Tañada presenteda bill in the Philippine
Senate to preventthe utilizationby foreignbanks of hard-earned
Filipino savingsfor the "preservationof alien dominance of our
economy."Outside pressurekilled the bill but duringthe hearings
these factscame out: of the four foreignbanks, one admittedto
havingbroughtno capital at all, two could not give any pertinent
data, and the last admittedto have broughtin only $2.2 million.
Yet, ascordingto the records,the firstbank earned from 1947 to
1958, a net profitof PI 1.32 million; the two "reluctant"banks
earned,between1945 and 1958,net profitsof P30.40 million; and
the fourthearneda net profitof PI 8.70 million.92
88 Ibid.,p. 6.
89 Abaya,UntoldPhilippineStory,op. cit.,p. 350.
90 Ibid.
91 Ibid.
92 Ibid.
In gold productionthe U.S. companieshave been subsidized

by the CentralBank, whichover the yearshas boughtgold at $57
to $67 per ounce, i.e., $22 to $32 above the world price of $35 per
ounce,untilthelatterwas increasedby thedevaluationof thedollar.
The above data shatterthe mythof "foreign"investments in
thePhilippines.There has been,in fact,a netoutflowofcapitalfrom
the Philippines.Foreign firmsmerelybring in token capital and,
using theirinfluence,raid our local financialinstitutionsformore
capital for investments. Adequate local influenceand monopolistic
practicesallow these firmsto accumulate and remit home huge
profitsseveraltimestheirtokenactual investments.
From 1946 to 1971 the Philippinesreceived a total of $1.26
billion in aid fromthe United States.93This amount appears im-
pressiveuntil we break it up into some of its components.Part of
the aid was made available under the Philippine Rehabilitation
Act of 1946,whichprovidedforan outlayof $400 million in war
damagesfor thosewho sufferedduringWorld War II, transferred
$100 million worthof surplusmilitarypropertyto the Philippine
government,and alloted $120 million for use until 1950 in the
constructionof public utilities.94The paymentfor war damages
came to a little over half of the adjudicated awards of damage to
privatepropertyat 1941 prices,which were much lower than re-
placementcosts in 1946.95Part of the purpose of the paymentof
war damage claims was to restoreformerAmericanbusinessesin
the Philippinesto theirprewarstatus.96
It mustbe notedthatU.S. foreignaid is seldomgivenin dollars
but usuallyin over-pricedequipment,goods or services,and hence
it servesmainlyas a formof subsidyto Americanexporters.An
example of over-pricing was the transferof P274 million "worth"
of surplusequipmentto the Philippine governmentas part of the
war damage payment.The Philippine governmentrealized only
93 Korea and the Philippines,op, cit.,p. 37. We did not include the militaryaid
duringthe same periodamountingto $631.7million(Ibid.,p. 42) becausethe vast
majorityof the Filipino who sufferrepressionunder the presentmilitarydic-
tatorshipwould have been betteroffwithoutit.
94 Taylor,op. cit.,p. 126.
95 Ibid.,p. 126.
96 Ibid.,p. 115.
P73.5 millionfromits sale.97Of course,partof the difference is
attributable to officialcorruption, forwhichboth the donorand
therecipient governments mustshareresponsibility.
Asidefromliningthepocketsof thebureaucrat-capitalists, the
restof the$1.26billion,whichconsisted of loansand grants, have
beenspenton projectswhichare of interest to U.S. business.Such
projects include building of roadsand providing otherfacilities to
open up markets so thatsurplusproduction be can sold and, we
mayadd,to facilitate theextraction ofrawmaterials. Followingthe
generalschemeofU.S. imperialism in Asia,attempts havealso been
made to raisethe purchasing power of the peasantry in orderto
createmarkets forindustrial products, to producesurplusfoodand
agricultural products, and to releasemore workers fortheindustrial
sector.98
Loan agreements withtheUnitedStatesor U.S.-controlled in-
stitutions involvedin theaid program includetermsso onerousthat
Magdoff has referred to themas international usury.99Hence,like
theothernationsof the Third World,the Philippinescould not
meetits loan obligations and couldonlyacceptdictationfromits
creditors, suchas theInternational Monetary Fund and theWorld
' its loans,
Bank,in exchangeforits beingallowedto "restructure'
i.e., to renegotiate the loan agreements so thatthe payments of
interests could be postponed.For example, the adoption of the
floating rate for the peso (a euphemism for devaluation) against
the dollarwas "suggested'* by the International MonetaryFund.
Otherconditions normally includethe puttingup of counterpart
fundsor,in thecaseof development projects, therequirement that
certainequipmentbe purchased fromAmericanfirms.100
That thereweresomeimprovements made in the Philippines
97 D. Würfel, "Problems of Decolonization," in Golay, op. cit., p. 155.

98 Taylor, op. cit., p. 176.
99 Harry Magdoff,The Age of Imperialism (New York, 1968).
100 A typical example was the agreement for the establishmentof the Iligan Inte-
Ex-
grated Steel Mills, Inc., in 1964. Of the P458 million total capitalization, the
Bank provided $62.3 million (about P240 million) in the form of
port-Import
loans. Before this amount could be granted the Export-ImportBank required the
submission of a detailed economic and technical feasibilitystudy by a reputable
American consulting firm. Naturally, U.S. firmssupplied equipment and services.
(A Development Programmefor the Philippine Iron and Steel Industry,Programme
Implementation Agency, Manila, Philippines, 1965, pp. 17-20.)
duringthe U.S. colonial administration is undoubtedlytrue. How-

ever,theywere incidentalto the main imperialistobjectives.Most
public improvements in any colony are made for the purpose of
assistingWestern enterprisesin theexploitationof naturalresources.
As Mason has pointedout, the efficient productionof raw materials
in the underdevelopedcountriescan rarelytake place withoutthe
expansionof auxiliaryservices-roads,railroads,port development,
electricpowerand the like- whichhave a contributionto make to
the general economic development.101 Even social servicesserve a
vitalrole for imperialism.Consider the followingstatementmade by
the BritishSecretaryfor the Colonies beforethe House of Com-
mons on May 27, 1949: "A large part of the outlaysunder the
heading 'social services'are regardedas economicexpenditurefor
promotingthe general efficiency of the workersand preventinga
great deal of or
waste/'102 that of Mr. Nelson Rockefeller:"Absen-
teeism in the Vitoria-Minas railroad was cut dramaticallyby ef-
fectivemalaria control.This has made it possible to reduce main-
tenancecrewsby one third,which,in turn,has cut the cost of ex-
tractingand transporting iron ore and mica fromthe Rio Doce
Valley."103
We do not deny the value of such contributions, but we point
out thattheylose much of theirvalue in the face of the oppression
and exploitationof the Filipino massesunder U.S. imperialism.
The performanceof the United States in the Philippinescan
be judged by the conditionswhich have been perpetuatedthere.
Even during the Commonwealthperiod therewas no appreciable
improvementof the quality of life of the vast majorityof the
Filipino people. A reportof the ForeignPolicy Associationsays of
the Philippines:104
Duringtheperiodof US rule from1900to 1946,it is doubtfulwhether

the livingstandardsof the tenantsand agricultural
workers(the over-
whelming bulk of the population)registered
anymarkedimprovement
overthemiserableconditions of the 19thcenturySpanishrule.
101 Baran,op. cit.,p. 192.
102 Ibid., pp. 204-205.
103 Ibid., p. 205.
104 PhilippineInformation Bulletin,op. cit.,p. 4.
In 1952theHardiereport revealedthatthecondition oftheFilipino
masseswas even moredeplorableand warnedthatunlessit was
corrected it was easyto conceiveof a situation"worsening to a
pointwhere the United States would be forced to take direct,ex-
pensive,and arbitrary stepsto insureagainstthelossof thePhilip-
pines "105
Despitethe deplorableconditionsbeingperpetuated by U.S.
imperialism in the the
Philippines, ruling classeswant not onlyto
assuretheUnitedStatesfullprotection forAmerican businessthere,
butalsotoencourage moreU.S. investors to join theexploitation of
ournationalpatrimony andourpeople.Whytherulingclasseshave
persistently adoptedthisnotoriouspolicymay be understood by
examining the dominant power structurein the Philippines.
We haveseenearlierhowtheU.S. colonialpolicyin thePhilip-
pines succeededin consolidating the alliance of the dominant
politicalforces in the Philippines- U.S. imperialists,
the the land-
lords,the compradors and the bureaucrat-capitalists.By insuring
markets forrawmaterials and agriculturalproducts, extending aid
or subsidiesforagricultural and
development production, provid-
ing farm equipment, maintaining a formidable military presence
and supplying weaponsforthe local armedforcesas an insurance
againstthewrathof thepeasantry, theUnitedStateshas beenable
to maintaintheloyaltyof the landlords.In return,the landlords
havebeen themostenthusiastic protectors of,and spokesmen for,
in
Americaninterests the Philippines. They buy their equipment
fromU.S. firms and supplyrawmaterials and agricultural products
neededby theUnitedStates.Theyalso maintaintheirfeudalcon-
trolof the countryside to preventthe peasantry fromorganizing
themselves intoa potentpoliticalforcewhichmightopposeforeign
domination. As an essentialcomponent of thisalliance,the com-
pradorclassderiveshugeprofits through exportofrawmaterials
the
and theimportation ofmanufactured goods.Hence it is also in the
ofthisclasstokeepthestatusquo andmaintainthealliance.
interest
Amongthesegroupsarethebureaucrat-capitalists whohavea serious
responsibility.It is theirdutyto protecttheallianceand theyare
generously rewardedforit. They receiveloans and grantsto run
105 Abaya,UntoldPhilippineStory,op. cit.,p. 70.
the bureaucracyand theyuse their power and influenceto amass
wealth. However, the fate of Diem of South Vietnam servesas a
grimreminderto the top bureaucrat-capitalist thathe cannotafford
to fail. When this alliance is threatenedby the awakened masses,
the top bureaucrat-capitalistis compelledto assume dictatorialpo-
wers in an attemptto please the imperialists,preservethe alliance
and keep himselfin power.
What we have just describedis the basic relationshipamong
the various groups formingthe ruling classes in the Philippines.
Who among the elementsof these groups would be interestedin
Who would want a more equitable distribution
industrialization?
of the national wealth and income which would require at least
massive land reforms?Would the InternationalHarvester,Ford,
General Motors,General Electric,Union Carbide, Atlas Consoli-
dated,B. F. Goodrich,Caltex and manyothersallow us to develop
our own industries,produce our own equipment,processour raw
materials and refine crude oil from cheaper sources?106 Would
thesenot constitutean erosionof theircontrol over our cheap raw
materialsand labor and theirpresentlocal markets?On the question
ofland reforms,would theU.S. AgroCorporationsin thePhilippines
allow their implementation? Would theygive up theirvast land-
holdings?If land reformswere carriedout what would happen to
the landlords?Would the U.S. imperialistsallow theirlocal bases
of powerto be emasculated?And if the landlordslose controlover
their tenantshow could theycontrolthe countryside? Would not
thepeasants,havingwon theirfreedom,decide to sell theirproducts
elsewhereor organize themselvesto oppose foreigndomination?
And once the alliance is broken what would happen to the com-
pradors?the bureaucrat-capitalists?
These are questions which must be consideredif we are to
understandwhy we have failed to develop our own industries,
exceptsuchminorones as thoseengagedin theproductionof patis,107
toothpicksand handicrafts, and why land reformprogramsin the
Philippineshave always failed.
106 In 1971theoil cartelin thePhilippinesboughtcrudeoil fromits subsidiariesat a

postedprice of $2.40 per barrelalthoughRussian oil is available at less than
half thatprice(Samahanng mga MakabayangSiyentipiko, op cit.).
107 A nativesauce derivedfromfish.
Admirersof Americanbusinessassertthat U.S. businesswants

to see the Filipinosdevelop theirown industrieseven to the extent
of competingwiththoseindustriespresently controlledby American
business.They argue that the same firmswould then be happy to
supplyus withmachinery, spare partsand technicalservices.They
cite, as examples,South Korea and Taiwan, where the national
capitalistshave made some progress.They feel that the Filipino
nationalcapitalistssimplylack initiativeand entrepreneurial talent.
It is also assertedthatsincethetwobilliondollarsworthofAmerican
investment in the Philippinesformsonlya verytinyfractionof the
U.S. GNP it mattersverylittlein the calculationsof the American
people. The firstassertionis not onlyfutile,since intentionscannot
be measuredand since, as we have seen, Americancontrolof the
Philippine economyand financialinstitutionshas suppressedthe
developmentof the national capitalists,but also lacks theoretical
and materialbasis.The secondassertionarisesfromconfusionabout
whatis in the interestof the Americanpeople. Althoughthe Philip-
pines has littlerelevanceto the vast majorityof the Americanpeo-
ple, individual U.S. corporations,which formthe most powerful
sectorof Americansociety,have great stakes in the Philippines.
Consideringthat these firmsearn superprofits in the Philippines
even when businessis bad in the United States,it is difficultto
expectthemto trade the presentprofitablesituationforan uncer-
tain one.
Moreover, drastic actions have been taken by the United
States throughits agencies,particularlythe CIA, in many places
where the interestsof the oil cartel, United Fruit, International
Telephone and Telegraph and other U.S. corporationswere in-
volved.108
There is no evidence that this trendin U.S. policy has been
reversedin the Philippines.On the contrary, the recommendations
of the President'sCommissionto SurveyPhilippine Education109
of CIA activitieson behalfof Americancompanies,see O'Connor,

108 For discussions
op. cit.,R. I. Rhodes(ed.), Imperialismand Underdevelopment
(New York,1970);
and J. Anderson,on the ITT-CIA activitiesin Chile, ChicagoSun-Times,March
21. 1973.
109 President'sCommissionto SurveyPhilippineEducationReport,Manila, Philip-
pines,1970.
whichwas financedby theFord Companyto studyPhilippineeduca-

tion show that U.S. business anticipatesfuture expansions and
wants the Philippine educationalsystemto turn out middle-level
techniciansto serve its growingneeds. What one can realistically
expect in the Philippinesis a program,perhapsthroughAID, to
sustainthe "handicraftmentality"and even to subsidize,and find
foreignmarketsfor, our handicraftindustry.This will both in-
crease the generalpurchasingpower of the Filipinos and turnthe
attentionof the national capitalistsfrom the strategicindustries
which are presentlycontrolledby U.S. business.At the same time
attemptswill be made to increaseagriculturalproductivitythrough
agencies such as the InternationalRice Research Institute.Such
of
programs, course, cannot resolve the between
contradictions
U.S. imperialismand the Filipino people. They could, at best,
mitigate,hence make more efficient, the presentoppressionand
exploitation of the Filipino masses.
ForestPark, Illinois

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S&S Quarterly, Inc.

The Roots of Backwardness: An Analysis of the Philippine Condition

OPTIMISTIC GOVERNMENT REPORT puts the per

One of the mostoppressiveaspectsof Philippinesocietyis the

5 Food and Agricultural Organization(U.N.) Reporton the 1960 World Censusof

showsthat,on the basis of clinical analysisfornutritionaldeficien-

9 "Nutritional Survey of Metropolitan Manila," Food and Nutrition Research Cen-

antibodiesagainstdiphtheriaor typhoid.17 Other studiesshow an

referringto the condition of the people of Negros Occidental,

26 Philippines Free Press, April 26, 1969,cited in Verdad, op. cit., p. 9.

Philippines,the United States embarkedon a new imperialism

The U.S. positionhereis verystrong.They have nothingto worry

The same note was echoed in Manila by AssistantSecretaryof State

Catholicreligiousorders,theyformedthe landlordclass and became

39 H. F. Graff, AmericanImperialismand the PhilippineInsurrection(Boston,1969),

this class formedthe Federal Party,42 which advocated American

trationincludedthesendingof a largenumberof students to the

47 Abaya,op. cit.,p. 25.

Yet when 5,500 alleged collaborators,includingthe top officialsof

A little publicizedgroup of U.S. governmentdocumentsrevealsthat

operationsin the Philippines,leadingto a

Accordingto the same report,trainingcenters,police agencies

George Taylor, an experton U.S. foreignpolicy,explains the

The PhilippineRepublicis an essentialmemberof thesystem ofmutual

Regardingthe extensiveassistancethe United States is giving to

The PhilippineSecurities and ExchangeCommision estimated

71 New York Times, September 26, 1972.

The Business Achievers

Company Nationality (million)

charteredby it.78We have seen earlierthattheratesof profitsof the

78 M. Tänzer, The PoliticalEconomyof InternationalOil and the Underdeveloped

79 Guerrero, op. cit.,p. 139.

whichwas then at least $3 billion,83and that grossinvestmentac-

83 Based on the fact that the PhilippineGNP in 1946 was already$3,228billion

only$19.2 millionin foreigncapitalbut theremittances of earnings,

In gold productionthe U.S. companieshave been subsidized

97 D. Würfel, "Problems of Decolonization," in Golay, op. cit., p. 155.

duringthe U.S. colonial administration is undoubtedlytrue. How-

Duringtheperiodof US rule from1900to 1946,it is doubtfulwhether

105 Abaya,UntoldPhilippineStory,op. cit.,p. 70.

106 In 1971theoil cartelin thePhilippinesboughtcrudeoil fromits subsidiariesat a

Admirersof Americanbusinessassertthat U.S. businesswants

of CIA activitieson behalfof Americancompanies,see O'Connor,

whichwas financedby theFord Companyto studyPhilippineeduca-

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