Policy of attraction, part 4

 Americans don’t spend enough time thinking about the Philippines. America behaved as a deucedly strange colonial power. One of the strangest things was the way the U.S. prevented Americans from investing in the new territories.

Worst empire ever? What was that all about? Well, in May 1901 1902, the Americans signed a peace agreement with Emilio Aguinaldo, the leader of the insurgency. The advent of a negotiated peace meant that the McKinley administration needed Congress to establish a civil government in the Philippines. Without a civil government, the U.S. would be unable to sell public land, issue mining concessions, or otherwise alter Spanish law.

Problem is, Democrats were inalterably opposed to allowing American investment into the islands. Not in agriculture, not in mining, and certainly not in manufacturing. Now, some of the worry was straight protectionism ... but less than you would think. In the early 20th century, the GOP was the party of protection; the Democrats were the party of free trade.

So why the opposition to allowing Americans to invest in the Philippines? Simply put, the Democrats hated the idea of America as a colonial power. They feared that sizeable U.S. investment would create a domestic interest group with an interest in the permanent retention of the archipelago. That would make annexation much harder to reverse. (Democratic opposition to permanent retention of the Philippines, it should be noted, had much of its roots in racial anxieties over the addition of 7 million “Malays” to the United States. If the Philippines had possessed the racial makeup of Cuba, the Democrats would have set it on the road to statehood; the loudest opponents of Philippine annexation also decried the decision to make Cuba a protectorate. Cuba, you see, had enough white people to imagine it as a state.)

But don’t take my word for it! Senator Fred Dubois (D-Idaho):

I have tried, in what I have said, to be temperate in language. I have endeavored to argue the question presented by this majority bill fairly, with good temper, and honestly. I do not think it will be easy to get out of the Philippine Islands, should future events demonstrate the wisdom and necessity of doing so, after American capital has gone there and is being employed under the tempting opportunities presented by this bill.

Do they not know, if this bill passes, the difficulties in our path will be multiplied many times, provided in the future it is deemed patriotic and wise to allow the Filipinos their own independent government? The granting of these extra privileges and unusual inducements which are offered to corporations and syndicates, it seems to me, contemplates a fixed purpose on the part of the advocates of this bill to retain the islands for all time to come as a colony, as a dependency of the United, States.

Representative John Robinson (D-Nebraska):

The bill which is now before the House provides for the organization of corporations to carry on all branches of business. It provides for the issuance of bonds by the Philippine government and certain of the cities of those islands. It invites the investment of capital, and in the future capital so invested in the Philippines, held by our own and citizens of other countries, will urge their claims to our protection with a stronger voice, and clamor more loudly than ever, that in honor we must not leave their interests unprotected in these islands: but that we must continue to hold down these people by force of arms. We must continue to spend millions of dollars annually to maintain an army there. We must continue to send the flower of our youth to these tropical islands, in order that foreign investors, seeking only worldly gain. may continue to exploit this unfortunate people.
  
An argument such as this, Mr. Chairman, would mean that the time will never come when we can withdraw our forces from these islands. It would mean that the reasons which prevent us now from granting these people their independence would become stronger with each passing year, and that at no time could we hope to withdraw our jurisdiction and leave these people in liberty and peace.

Representative John Williams (D-Mississippi):

Nor do we give away, or prepare to give away, their franchises. It would be contrary to the Democratic theory if we made the slightest preparation for that, because every vested interest which we plant in the Philippine Islands is one more strong voice enlisted in favor of their permanent retention — a vested interest pleading not to be left.

Representative Allan McDermott (D-New Jersey) similarly worried that allowing the government of the Philippine Islands to sell bonds to American investors would indelibly link them to the U.S.:

This bill settles the policy of the Republic Party. It is to be continuing possession and occupancy with unlimited additions to our bonded debt.This bill means that we are to permanently hold the Philippine Islands, and I predict the holding will prove a plague to ourselves and our children.

Representative David De Armond (D-Missouri):

Civil government for the Filipinos! Civil government in which the Filipinos do not participate; civil government in which the Filipinos have no part; civil government which-the Filipinos do not desire; civil government, not for the benefit of the American citizen, but for the American promoter, the American syndicate organizer, the American capitalist, the American boss, the American contributor to campaign funds, used to corrupt the needy voter, to overcome the judgment of the honest element of American citizens, and win victories by false pretenses and more positive wrong. [Applause on the Democratic side.]

And so the Democrats held up the bill, using the filibuster in the Senate and capitalizing on Republican protectionists in the House. The resulting Philippine Organic Act of 1902 heavily restricted the rights of non-Filipinos and all corporations to own land or invest in mineral rights in the Philippines. It banned Americans and American companies from owning more than 1024 hectares (2500 acres) of land and limited mining claims to one claim of 1,000 × 1,000 feet per lode. It also limited the ability of Americans to invest in public franchises and utilities.

For a colonial power, this was weird.

Congressional Democrats did not completely prevent Americans from investing in the Philippines. A 1905 act allowed the insular government to issue railroad concessions, for example. In addition, Americans could invest in sugar mills (although not sugar lands) and they could physically move to the islands and invest as Filipinos in mining operations. Nor did the Democrats manage to keep the Philippines outside of the American customs area; free trade arrived in 1913.

But caveats aside, the restrictions worked. When the Commonwealth of the Philippines became autonomous in 1935, they received a country that was almost entirely owned by Filipinos. That might not have been the best thing for the country’s economic growth, but it was seriously bizarre for a country that had just spent 37 years as a dependency.

Weirdest ... empire ... ever.

Comments

[Peter]

Well,in 1902, the Americans signed a peace agreement with Emilio Aguinaldo, the leader of the insurgency. The advent of a negotiated peace meant that the McKinley administration needed Congress to establish a civil government in the Philippines.

Sorry to nitpick - wait, why am I apologizing, I love to nitpick - but unless someone held a seance there wasn't a McKinley administration in 1902.

[Noel Maurer]

Yeah, I elided the history. The civil government bill was introduced in 1900, but Democratic opposition meant it didn't pass until 1902. I shortened something I'd written to go into the post, for simplicity, and forgot to correct the President's name.

Fixed now.

[Noel Maurer]

I should add that the bill was introduced right after the November election. The insurgents closely monitored American politics, and once the GOP won, surrenders multiplied. Aguinaldo didn't make peace until May, but the writing was on the wall.

I'll also add that the Philippine War ended in a negotiation. It was not a victory, and yes, the Democrats made a lot of hay about the turnaround in Republican rhetoric. Aguinaldo went from a white-person-hating savage to a statesman who of course would be given land and a high position in the government.

[Leonora Eldona]

Helping my son prepare for a school presentation on the Bell Trade Act of 1946 and stumbled upon this discussion. Could you explain what led to the complete turnaround in the US legislators' position when it comes to allowing US investments in the Philippines. That is, strong opposition in 1902 versus insisting it in the Bell Trade Act of 1946. Is it mainly driven by the experiences of WWII?

[Noel Maurer]

Hi, Leonora,

Sorry for the delay! The short answer is that no, it didn't really have to do with WW2. What changed was Philippine independence.

When the U.S. annexed the Philippines, Congressional opposition ran very high. The reason was that many Democrats feared that once under U.S. sovereignty, the Philippines would never become independent. They feared that Americans would invest in the islands and form an undefeatable anti-independence lobby. (The primary reason for Democratic opposition was racial: they feared that if the Philippines remained a colony, Filipinos would eventually gain citizenship. Adding seven million "Malays" to the American polity was not palatable.

The easiest way to prevent the formation of such a lobby was to prohibit American investment in the islands. The Democrats used parliamentary delaying tactics to force the Republicans into agreeing to such a prohibition. Even after the Philippines started on the road to independence in 1934, there was little support for relaxing the prohibition --- after all, the scheduled independence date could always be postponed. (In fact, we know that Manuel Quezon was lobbying against full independence until the last possible minute.)

By 1946, however, independence was in the bag. That removed strong Congressional opposition to American investment. Sure, allowing investment might produce a lobby with incentives to keep America involved in Philippine affairs ... but there was no longer any risk that such involvement would either involve the United States on the wrong end of a independence struggle or (more relevantly) become a large version of Puerto Rico, with mass migration to the mainland. What opposition remained to the Bell Trade Act was weak and fragmented.

Does that help? For more on the politics of Philippine annexation, see Chapter 2 of The Empire Trap. http://www.amazon.com/The-Empire-Trap-Intervention-1893-2013/dp/0691155828

[Matt McIrvin]

The alternate history in which the Philippines eventually become a state, or maybe a collection of several states (the population is more than twice as large as California) seems like an interesting one.

[Noel Maurer]

Except that the scenario is literally unthinkable, in the sense that I can't think of how it possibly could have happened.

[J.H.]

You would probably need to silence all the Democrats and a few Republicans for it to happen no?

[Carlos]

You would need to change the deeply held beliefs of almost everyone in the governing class -- not merely their racial beliefs, but their beliefs about religious affiliation (most Filipinos then as now were Catholic), illiteracy, and poverty.

Even had most Filipinos been white English-speaking Protestants, I bet there would still be objections to their deep poverty and their willingness to undercut the authentic descendants of Pilgrims and pioneers for good American jobs.

(On the other hand, you wouldn't have the sexual paranoia, my personal favorite of the charges against Filipino immigrants. All those well-dressed and well-mannered Filipino migrant laborers successfully chatting up white women at the dance halls. It literally provoked riots.)

[Noel Maurer]

I'm not as sure that Catholicism and poverty would have been show-stoppers: consider Puerto Rico. Or the votes on Dominican annexation treaty; the Senator who killed it was a Catholic but objected on racial grounds.