Chapter XXVI: Congressional Legislation

Taxation without representation is good cause for revolt.

American Speech of 1776.

As a colony of Spain the Philippines enjoyed certain special privileges in the way of trade with the "mother country." When at the beginning of our military occupation in 1898 General Otis detailed an army officer to take charge of the Customs House, he continued for the time being the Spanish tariff laws concerning imports and exports. On September 17, 1901, the Philippine Commission passed a tariff act [511] fixing the duties on imports into the Islands and also continuing to a considerable extent the system of duties on Philippine exports inherited from the Spanish regime. Among the products of the Philippine Islands on which the Act of September 17, 1901, imposed an export tax were the following:

Hemp, 75c. per 100 kilos [512]; sugar, 5c. per 100 kilos;
manufactured tobacco, $1.50 per 100 kilos; raw tobacco, $1.50
down to 75c. per 100 kilos. [513]

On March 8, 1902, the United States Congress passed an Act, "temporarily to provide revenue for the Philippine Islands and for other purposes." The Act of 1902 re-enacted the Commission's tariff law for the Philippines of September 17, 1901, with one change, hereinafter to be discussed, as to its export tax features. As to the tariffs to be collected at our custom-houses on Philippine products shipped to the United States, the Act of 1902 reduced the rates fixed by the Dingley tariff to seventy-five per cent. of said rates. That was all Congress did in the way of lowering our tariff wall to Philippine products until 1909, when the Payne-Aldrich tariff bill became a law. This twenty-five per cent. reduction was no better than no reduction whatever would have been.

Governor Taft pleaded very earnestly with Congress, at the time of the passage of the Philippine Tariff Act of March 8, 1902, for a substantial reduction of the Dingley tariff rate on sugar and tobacco, so as to give his "constituents"--his Filipinos--something in lieu of the markets they had had under Spain. But our sugar and tobacco interests defeated his efforts, because they feared what they termed "competition with cheap Asiatic labor."

The Act of Congress of March 8, 1902, repealed the export duties imposed by the Act of the Philippine Commission of September 17, 1901, as to exports to the United States, leaving unrepealed, however, the export duty on Philippine products shipped to foreign countries. Section 2 of said Act of 1902 provided, as to exports from the Philippines to the United States, that the rates of duty upon products of the Philippine Archipelago coming into the United States, should be less any duty or tax levied, collected, and paid thereon (under the Act of the Philippine Commission of September 17, 1901, aforesaid) upon the shipment thereof from the Philippine Archipelago. This sounds liberal enough. It is, as far as it goes. But what those familiar with the hemp infamy of the Act of 1902 call "the joker" in it, is as follows:

All articles, the growth and product of the Philippine Islands,
admitted into the ports of the United States free of duty
under the provisions of this act, and coming directly from said
islands to the United States, for use and consumption therein,
shall be hereafter exempt from any export duties imposed in the
Philippine Islands.

This also sounds liberal, on first reading, but its object was, and its effect has been, to enable the American Hemp Trust to corner and control the Manila hemp industry. There is but one article of Philippine export which any one in the United States is interested in, that was admitted into the United States free of duty under the Dingley Act. [514] That article is hemp. The object of the law was to favor Americans interested in exporting hemp from Manila to the United States as against Europeans exporting it to England and other foreign countries. This does not look, on its face, either unpatriotic or un-Christian. It is not unpatriotic or un-Christian, ordinarily, to favor your own people, as against their foreign competitors. The moral quality of such favoritism, however, must depend on who is to pay for it. Under the Act of 1902, the Manila authorities have always collected an export tax on hemp coming to the United States, just as they do on hemp going from Manila to foreign countries, exactly as if the law abolishing the export tax on hemp coming to the United States had never been passed. Later, on proof that the hemp was in fact carried to the United States and used and consumed therein, they refund the export tax. This is on the idea that they cannot tell where the hemp is going to until they know where it went to, nor where it is going to be "used and consumed" until they know where it was in fact finally "used and consumed." Of course the small farmer is in no position to follow his bale of hemp into the markets of the world and show, if it happens to go to the United States, that it did in fact go there and that it was there "used and consumed," and, finally obtaining the proof of this, submit it to the Manila Government and get his little export tax on his bale of hemp refunded. Only the big buyer's agents at Manila are in a position to do this. So the hemp crop is bought and moved under conditions which are the same as if all hemp were subject to an export tax. And only the big fish get the benefit. For instance, the International Harvester Company has its hemp buyers at Manila. And as to the part of the Philippine hemp crop it handles, it can, of course, follow the hemp to its ultimate consumption in the United States, make the proof, and get the refund.

The wealth of the Philippines is practically entirely agricultural. Neither mining nor manufactures cut any appreciable figure. Hemp, sugar, tobacco, and copra [515] are the chief staples and main exports, and of the first of these Secretary of War Taft says in one of his reports: [516]

The chief export in value and quantity from the Philippines is
Manila hemp, it amounting to between 60 and 65 per cent. of the
total exports.

Let us see just how far, according to the annual reports of our own agents in the Philippines--those charged by us with governing them,--this piece of legislation gotten through by "special privilege" has depressed the Manila hemp industry, the chief source of wealth of the Islands. And before we even get to the main trouble, let us permit the Insular Government to "place on the screen," as a preliminary "view," a glance at what the instinct of self-preservation of American sugar and tobacco interests, fearing competition from "cheap Asiatic labor," have deemed it necessary to do to the Philippine sugar and tobacco industries, through the Dingley tariff. The annual report of the Philippine Commission for 1904, before it gets to the subject of hemp, draws a most gloomy picture of how we killed the markets for sugar and tobacco the Islands had under Spain, and gave them none instead. They speak of "the languishing state of these industries" (p. 26), and describe a state of affairs that sounds more like Egypt under Pharaoh than anything else, including a cattle disease that carried off ninety per cent. of the beasts of burden of the country, and wholesale destruction of crops by locusts. [517] What they have to say of the annual tribute levied by the American Hemp Trust, through Congress, on the Manila hemp industry, should not be re-stated, but quoted. They say: [518]

We desire to call attention to the injustice effected upon the
revenues of the islands by section 2 of the Act of Congress
approved March 8, 1902, which provides that the Philippine
Government shall refund all export duties imposed upon articles
exported from the islands into and consumed in the United
States. Under the provisions of this section there has been
collected in the Philippine Islands, since its enactment down to
the close of the fiscal year 1904, the sum of $1,060,460.20 United
States currency, which is refundable. These refundable duties
are principally upon hemp exportations to the United States,
and are in effect a gift of that amount to the manufacturers of
the United States who use hemp in their operations.

They add:

It is manifestly a discrimination in favor of our manufacturers
as against those of foreign countries. No good reason is perceived
why this bounty to American manufacturers should be extracted from
the treasury of the Philippine Islands, and it is respectfully
submitted that the law authorizing it should be repealed.

The annual report of the Philippine Commission for 1905, after the usual complaint about being made a political football by Benevolent Assimilation on the one side, and Louisiana and our sugar-beet States on the other, and the usual annual and true description of the consequent poverty, says concerning hemp:

We have several times in our reports called attention to the
practical workings of that portion of the Act of Congress approved
March 8, 1902, which provides for the refund of duties paid
on articles exported from the Philippine Islands to the United
States and consumed therein, and have as repeatedly recommended
its repeal. It is a direct burden upon the people of the Philippine
Islands, because it takes from the insular treasury export duties
collected from the people and gives them to manufacturers of hemp
products in the United States. These manufacturers were already
prosperous before this bounty was given them and it seems hardly
consistent with our expressions of purpose to build up and develop
the Philippine Islands when we are thus enriching a few of our
own people at their expense. [519]

By the end of the fiscal year 1905 (June 30), the American importers of Manila hemp--of whom the International Harvester Company and its allied interests are the most influential--had, under the operation of the rebate system based on the Act of 1902, milked the Philippine people to the tune of about $1,000,000. Says the Philippine Commission's annual report for 1905, immediately after the passage last above quoted:

The amount of duties refunded under this act to manufacturers in
the United States during the three years ending June 30, 1905,
is $1,057,251.12. Many of the departments of the government are
much hampered in their operations because of the lack of funds,
notably the bureau of education, and were the sum thus taken
available for educational purposes, to say nothing of any other,
the government would be enabled to give instruction to thousands
of Filipino children whom they are now unable to reach and who
must remain steeped in ignorance because of the lack of funds to
provide such instruction.

Said the Manila Chamber of Commerce to the Taft Congressional party in August, 1905: "The country is in a state of financial collapse." [520]

Says the Philippine Commission's report for 1906 (pt. 1, p. 68):

The Commission has repeatedly called attention in its reports
to the action of Congress providing for a refund of duties paid
on articles exported from the Islands to the United States and
consumed therein. The reasons that led the Commission heretofore to
recommend the repeal of that provision are still operative. Since
the passage of that act on March 8, 1902, the amount of duties
collected and paid into the Philippine treasury and handed over
to manufacturers in the United States down to June 30, 1906,
is $1,471,208.47. This money has been taken out of the poverty
of the insular treasury to be delivered directly into the hands
of manufacturers of cordage and other users of Philippine hemp in
the United States for their enrichment. The cordage interests are
prosperous and do not need this help; the Philippine Islands are
poor. Legislation which takes money directly from the Philippine
treasury and passes it over to a particular industry in the United
States is not founded on sound principles of political economy
or of justice to the Filipinos. We renew our recommendation for
the repeal of this provision.

You also find in the Commission's report for 1906 the usual annual protests against the Dingley tariff on Philippine sugar and tobacco. Said the Honorable Henry C. Ide in an article in the New York Independent for November 22, 1906, written shortly after he retired from the office of Governor-General of the Philippines and returned to the United States: "By annexation we killed the Spanish market for Philippine sugar and tobacco, and our tariff shuts these products from the United States market, and to-day both these [industries] are practically prostrated." In their annual report for 1907, the Philippine Commission say with regard to the American corner on Philippine hemp: [521] "The price of hemp has fallen from an average of twenty pesos ($10 American money) per picul [522] to thirteen pesos per picul." It thus appears that by judicious manipulation of the hemp market at Manila, through the leverage of the refund system, based on collection and subsequent refunding of the export tax on hemp coming to the United States, the Manila agents of the American hemp manufacturers had, as early as 1907, beat the price of hemp down to not far above half of what it had been formerly. To-day (1912) the Filipino hemp farmer gets for his hemp just one half what he got just ten years ago. During all this period of economic depression, the public utterances and State papers both of President Roosevelt and Mr. Taft are full of such preposterous stuff as the following:

No great civilized power has ever managed with such wisdom and
disinterestedness the affairs of a people committed by the accident
of war to its hands. [523]

This is what Mr. Roosevelt and Mr. Taft were publicly pretending to believe. But at practically the same time, during as dark a year, economically, as the American occupation has seen, 1907, let us see what they were privately admitting to their intimate friends.

In the North American Review for January 18, 1907, in an article contributed to that Review by the author of this volume, our treatment of the Philippine people, through our Congress, was briefly discussed. The article chanced to attract the attention of Mr. Andrew Carnegie, who gave a considerable sum of money to have it reprinted and distributed. Some correspondence followed between us, in the course of which Mr. Carnegie stated that he had been at the White House shortly before writing me, and described what happened as follows:

When at supper with the President [Mr. Roosevelt] recently,
pointing to Judge Taft [then Secretary of War], who sat opposite,
he [President Roosevelt] said: "Here are the two men in all the
world most anxious to get out of the Philippines."

In another letter Mr. Carnegie described this same incident, this other letter's version of President Roosevelt's supper-table remark being:

Here are the two men in America most anxious to get rid of them
[the Philippines]. [524]

Now why all this public boasting about our "disinterestedness," when, if he had been a Filipino, Colonel Roosevelt would probably have hunted up all the American speeches of 1776 about taxation without representation, and played hide-and-seek with the public prosecutor at Manila, to see how far he could violate the sedition statute without getting in jail? And why this private admission to his friend Mr. Carnegie, which neither he nor Mr. Taft has ever publicly made? Why did he not send a message to Congress showing up the hemp rebate system? Simply because to do so would lose support for the Administration, would alienate powerful interests from the fatuous policy of Benevolent Assimilation bequeathed to Mr. Roosevelt by Mr. McKinley. His party was irrevocably committed to indefinite retention of the Islands. It was like Lot's wife. It could not turn back. So the protected and subsidized interests were permitted to continue to prey upon the Philippine people. Tariff evils were never President Roosevelt's specialty. Nor has war against intrenched privilege of any sort ever been Mr. Taft's specialty. Mr. Taft went out to the Philippines in 1907 to open the Philippine Assembly. In 1908 he came back and made a report to President Roosevelt which is as bland as his Winona declaration that the Payne-Aldrich bill is "the best tariff bill the Republican party ever passed." It makes the American reader's heart swell with pious pride at what he is doing for his "little brown brother," in the matter of vaccination, sewers, school-books, and the like. President Roosevelt sent this report to Congress, accompanied by a message, from which we have already quoted. In that same message he said:

I question whether there is a brighter page in the annals of
international dealing between the strong and the weak than the
page which tells of our doings in the Philippines.

Apparently, Messrs. Roosevelt and Taft thought, in 1907, that granting the Filipinos a little debating society solemnly called a legislative body, but wholly without any real power, was ample compensation for deserted tobacco and cane plantations and for the price of hemp being beat down below the cost of production by manipulation through an Act of Congress passed for the benefit of American hemp manufacturers. If we had had a Cleveland in the White House about that time, he would have written an essay on taxation without representation, with the hemp infamy of this Philippine Tariff Act of 1902 as a text, and sent it to Congress as a message demanding the repeal of the Act. But the good-will of the Hemp Trust is an asset for the policy of Benevolent Assimilation. The Filipino cannot vote, and the cordage manufacturer in the United States can. No conceivable state of economic desolation to which we might reduce the people of the Philippine Islands being other than a blessing in disguise compared with permitting them to attend to their own affairs after their own quaint and mutually considerate fashion, the Hemp Trust's rope, tied into a slip-knot by the Act of 1902, must not be removed from their throats. By judicious manipulation of sufficient hemp rope, you can corral much support for Benevolent Assimilation. Therefore, to this good hour, the substance of the hemp part of the Philippine Tariff Act of March 8, 1902, remains upon the statute books of the United States, to the shame of the nation.

At last, under the Payne tariff law of 1909, Mr. Taft's long and patient quiet work with Congressional committees prevailed upon Congress and the interests to admit Philippine sugar and tobacco to this country free of duty, up to amounts limited in the Act. [525] Since then you find the reports of our American officials in the Philippines palpitating with gratitude to Congress. As a matter of fact all Congress had said to the Filipinos by its action may be summed up about thus: "The sugar and tobacco interests of this country have at last realized that such little of the sugar and tobacco you raise as may stray over to this side of the world will not be in the least likely to hurt them. Therefore they have graciously decided, in their benignity, to permit you to live, provided you do not get too prosperous." But this very same Payne bill continued the export tax features of the Act of 1902. Section 13 of the Payne bill is as follows: