The economic situation of the Philippines during the Commonwelath era was one

that was heavily dependent on export agriculture, providing as much as 40% to

the national annual income while employing as much as 65% of the laor force!
The "ilipinos experienced a relative economic oom ecause of the free trade
relations with the #nited $tates of %merica, to which agricultural exports were
solely targeted and sold to! &ith the attempt at independence emodied y the
Philippine Commonwealth and as provided for y the Tydings'(c)u*e %ct, the act
of law which paved the way for all this, this oom on the "ilipino+s part in their
dependence on the %merican mar,et would soon come to a close! %s provided for
y the Tydings'(c)u*e %ct, tari- on Philippine exports to %merica would e
imposed starting the sixth year of the ten'year Commonwealth transitionary
government, rising 5% annually! This implementation and rise of export taxes on
"ilipino products would e one'sided as the provision does not provide for
reciprocal e-ects! %fter which, as written in the act, .%fter the Philippine /slands
have ecome a free and independent nation there shall e levied, collected, and
paid upon all articles coming into the #nited $tates of %merica from the Philippine
/slands the rates of duty which are re0uired to e levied, collected, and paid upon
li,e articles imported from other foreign countries!1 2The Philippine /ndependence
%ct, Chan 3oles 4irtual 5aw 5irary6 7ne could see this provision in the Tydings'
(c)u*e %ct as an attempt of %merican legislature to have the Philippines rethin,
its dreams of independence for such price would really e great indeed, ut alas
the Commonwealth pushed through and the Philippines had this new prolem to
consider!
"ollowing the successful estalishment of the Commonwealth headed y former
3esident Commissioner and $enate President ut now President of $tate (anuel 5!
8ue9on, this prolematic provision regarding tari-s and the all too real "ilipino
dependence on %merican'oriented export economy was given a solution y the
:oint Preparatory Committe for Philippine %-airs in coming up with the provisions
for the Philippine ;conomic %d<ustment %ct of =>40 2or etter ,nown as the
Tydings'?ocial,ows,i %ct6 that allowed for a @fteen year period of transition for
decreasing duty'free 0uotas instead of the suppossed implementation of
increasing export taxes or tari-s! This act also provided for reciprocal economic
e-ect as the #nited $tates would also e oliged to sumit to the duty'free 0uota
as well!
%nother provision in the Tydings'(c)u*e %ct that proved a hindrance towards
economic ad<ustment after full Philippine independence wa sits clause on the
handling of foreign a-airs! )uring this ten'year period of the Philippine
Commonwealth, .foreign a-airs shall e under the direct supervision and control
of the #nited $tates!1 2Tydings'(c)u*e %ct, Chan 3oles 4irtual 5aw 5irary6 This
control over foreign relations hindered any possile attempt at estalishing more
economic relations to other nations which could have found alternate outlets for
our already export'dependent economy without the prolems of sudden tari-
implementations! &ith this provision, the #nited $tates e-ectively clamped its
hand around Philippine foreign activity not <ust as an economic ody ut also as a
sovereign and independent one as well!
%side from the heavily export'oriented economy of the Philippines, local industry
was at a low level! &hat little form of industriali9ation that happened in the
Philippines then was controlled y foreign odies such as the %mericans, the
$paniards, the Chinese, and the :apanese! The local retail trade, credit, rice,
toacco, hemp, and copra economy was heavily controlled y the Chinese,
owning A5'BC% of the economic sector at that time! 5ocal @shing, mining,
lumering and other extractive economies were controlled y the :apanese, who
started coming intot he Philippines after the )epression and who even soon
outnumered Chinese immigrants y =>D>!
"aced with this prolem of extensive alien control over local economy, President
8ue9on attempted four solutions! The @rst of these was the %nti')ummy 5aw of
=>D> that punished "ilipinos found guilty of serving as .dummies1 for foreigners
see,ing to estalish foreign usinesses and investments in the country! This was
important to properly cur and oversee foreign activity in the local economy! /n
=>40, the second of these was passedEthe /mmigration 5aw! /t provided for
limiting immigrants to 500 individuals annually! This was to tie up with the %nti'
)ummy 5aw y way of lessening the possile numer of foreign immigrants
attempting to have "ilipino .dummies1 or fronts pass o- their usiness ventures in
the country! The third of these solutions is the pushing forward of the ?ey to
;conomic Fationalism concept or ?;F% in =>DB! This paved way for the fourth
attempt at stirring "ilipino interest in the local economy which was the
estalishment of F;P% or the Fational ;conomic Protectionism %ssociation that
aimed to stir preference for locally produced products! /n tandem with this is the
attempt at raising "ilipino interest in entrepreneurship throught he estalishment
of the Fational Credit Corporation!
The e-ectivity of the Tydings'?ocial,ows,i %ct and the four solutions that 8ue9on
estalished in the hopes of curing alien control over Philippine local and national
economy can never e truly assessed with the unfortunate and surprising onset of
the $econd &orld &ar that put a stop not only to the well'meaning ut heavily'
urdened Commonwealth government of the Philippines ut to the developments
of the whole world, therefore exisiting only in the painful realm of the what'if!