This tariff preference had its largest effect, slight as it was, on Philippine sugar. During the seven fiscal years when the 25 per cent tariff preference was in effect, 1903-1909, the proportion of all Philippine sugar exports shipped to the United States increased to 25.4 per cent, which compares with 17.8 per cent shipped to the United States during the Spanish period from 1890-1894, and with only 5 per cent shipped during the nonpreferential tariff period of American occupation, 1900-1902. However, the increased average proportion of Philippine sugar shipped to the United States during 1903-1909 was not specially significant (since no large tonnage was involved), and was far exceeded by the much larger proportions reached in later years under duty-free trade.

As regards Philippine tobacco products, the American tariff preference of 25 per cent accorded in 1902 had no substantial effect in increasing the amounts shipped to the United States, as compared either with the Spanish period, 1890-1894, or with the early American period, 1900-1902.

There were several factors tending to restrict the increase of Philippine sugar production for export during the last years of Spanish sovereignty, 1895-1897, and during the earlier years of American occupation, 1898-1901. There was the revolt of 1896-97 against Spain, the Spanish-American War of 1898, and the revolt of 18991901 against the United States. There was also a lack of efficient production methods; no centrifugal sugar was produced during this period. Finally, European bounties on beet sugar had practically closed certain markets against tropical cane sugar. It required time for Philippine sugar production to recover from the effects of these wars and other unfavorable conditions. During the preferential tariff period (1903-1909) some of these obstacles to production of sugar for export had been removed through pacification of the islands and by the abolition of the beet-sugar bounty system under the Brussels sugar convention of March 5, 1902. But there still remained a number of other obstacles to greater development of cane-sugar production in the islands: (1) Reluctance of foreign investors to develop the islands owing to uncertainty as to their political status; (2) statutory limitations of landholding by agricultural corporations to a maximum of 1,024 hectares (2,530 acres);1 (3) obsolescence in methods of production; (4) duty-free admission of Porto Rican and Hawaiian sugar into the United States; (5) reduction of 20 per cent in United States import duties on Cuban sugar (the nominally greater tariff preference of 25 per cent on Philippine sugar was possibly offset, largely if not wholly, by the freight differential against Philippine sugar). The reduction of 25 per cent in United States duties on Philippine sugar by the act of March 8, 1902, was apparently not sufficient to overcome these disadvantages affecting export production of Philippine sugar, for the maximum exported to the United States in any one year under this 25 per cent tariff preference was only 46,000 long tons, in the calendar year 1908, immediately preceding the inauguration of duty-free trade relations.

The large increase in manila-fiber shipments to the United States during 1903-1909 followed the act of March 8, 1902, which abolished Philippine export duties on products shipped directly to the United

Act of Congress approved July 1, 1902, secs. 15 and 75.

States if they were on the general free list of the United States tariff, and to increased prices of the fiber. (See Tables 3 and 25.)

Table 9 shows the changes in character of Philippine export trade to the United States and to all other countries, by annual average values of leading products, for the periods 1890-1894, 1900-1902, and 1903-1909.

Table 10 shows the annual and annual average values and the proportions of leading Philippine products exported to all countries and to the United States during 1900-1902 and during 1903-1909. Comparative Increase in Philippine Shipments to the United States, Distinguishing (a) Products Admitted Free of Duty Because of Their Philippine Origin (Preferential Free Entry), and (b) Philippine Products on the General Free Lists of the United States Tariffs."

During the seven years preceding the United States tariff act of 1909 all dutiable Philippine products shipped to the United States enjoyed a reduction of 25 per cent of the duty. This tariff reduction was changed to complete exemption from duty by section 5 of the act of August 5, 1909,2 which accorded duty-free entry into the United States for all direct shipments of Philippine products, except rice and articles containing more than 20 per cent non-Philippine or non-American materials. The exception as to rice was removed under Section IV, C, of the act of October 3, 1913, but there have been practically no shipments of Philippine rice to the United States, either before or after it became duty free in the United States.

During the first 51⁄2-year period of duty-free admission of Philippine products into the United States, 1909-1914, an annual average value of about $9,099,000, or 45.3 per cent of all Philippine shipments to the United States, entered free of duty because of this tariff exemption. These shipments increased to an annual average of about $71,061,000 in the five years 1923-1927, or 70 per cent of all Philippine products shipped to the United States; and increased further in 1928 to $85,296,000, or 73.7 per cent, and in 1929 to $97,240,000, or 78.1 per cent of the total. From 1909 to 1914 the proportion of Philippine world exports of these products sent to the United States was 63.1 per cent, increasing in 1923-1927 to 87.8 per cent, in 1928 to 91.2 per cent, and in 1929 to 92.4 per cent.

In other words, the annual average value of Philippine products enjoying preferential free entry into the United States was about 7.8 times the 1909-1914 average in the years 1923 to 1927, about 9.4 times in 1928, and about 10.7 times in 1929. During the same periods the annual average value of Philippine products admitted to the United States under its general free list-and therefore without tariff preference-was multiplied less than three times.

A comparison of the values of Philippine products entering the United States under the general free lists of the United States tariffs shows that the progress in these shipments also was considerable, but much less important in Philippine export trade than the movement of products which were duty free because of the United States tariff

The value of the total Philippine exports to the United States during the years ended May 31, was $124,882,000 for 1929, $119,927,000 for 1930, and $95,442,000 for 1931; during the corresponding periods total exports to other destinations were $41,041,000, $35,181,000, and $25,486,000, respectively. Thus, compared with the corresponding period of 1928-29, the value of Philippine exports to the United States for the years ended May 31, 1930 and 1931, decreased 4 per cent and 23.6 per cent, with exports to other destinations decreasing 14.3 per cent and 37.9 per cent, respectively. (For a similar comparison of total Philippine imports during the same periods, see footnote a, p. 41.)

At first, limitations (which were not reached during the term of their nominal operation) were placed upon the annual quantities of sugar, tobacco, and cigars, admissible free of duty, but these restrictions were removed under the tariff act of 1913.

preference. During the five and one-half years, 1909-1914, an annual average of about $10,983,000, or 54.7 per cent of all Philippine commodities shipped to the United States, came in under the general free list. This amount increased to an annual average of about $30,022,000 in the five years 1923-1927, but was only 29.6 per cent of total shipments to the United States; in 1928 the amount was about $29,652,000, or 25.6 per cent; and in 1929 $26,434,000, or 21.2 per cent of all Philippine shipments to the United States. In 1909-1914 the proportion of Philippine world exports of these products sent to the United States was 35.3 per cent; in 1923-1927 it increased to 53.7 per cent; in 1928 it was 51.2 per cent; and in 1929 48 per cent.

In 1930 Philippine shipments of all products to the United States amounted to $105,342,000, which was 79 per cent of all Philippine exports, and the highest percentage recorded for shipments to the United States.

Details of Philippine shipments enjoying preferential duty-free entry into the United States are given in Table 11,3 showing the amounts and proportions shipped to the United States, by annual averages, for specified groups of years from 1909 to 1927, and separately for the years 1928 and 1929. The 10-year period from 1899 to 1909, preceding preferential duty-free entry of Philippine products into the United States, has also been included in Table 11 for ready comparison with later periods.

Corresponding details respecting Philippine products admitted into the United States under the general free list are shown in Table 12. Increases in United States Imports from the Philippines, by Leading Commodities, 1909–1930.

Of the leading Philippine products entering the United States, practically all increased in average annual values during the 5-year period 1924-1928, as compared with the 4-year period first following the inauguration of duty-free trade, 1910-1913; for all commodities combined the increase was about $89,117,000. Of this increase about 77 per cent was accounted for by Philippine products enjoying dutyfree entry during 1924-1928 because of the special free-trade relations with the United States, while about 23 per cent consisted of products on the general free list and therefore enjoying no tariff preference during 1924-1928 because of their origin.

Imports into the United States from the Philippines in 1930 were about $109,390,000, and increased less than one-half of one per cent in value over the 1923-1928 average, but decreased 13 per cent in comparison with 1929. Concurrently United States imports from all sources decreased 24.5 per cent in value during 1930, as compared with the average of 1923-1928, and 30.4 per cent from 1929.

Table 13 indicates, by leading commodities, the consecutive annual average movement of leading United States imports from the Philippines for specified groups of years, from July 1, 1909, to December 31,

1930.

The sums of the respective columns in Tables 11 and 12 for the identical periods tabulated in both tables do not agree exactly with the total amounts of Philippine exports to the United States during those periods, but are deficient as compared with such totals. These differences are due to the omission from Tables 11 and 12 of a considerable variety of small Philippine exports to the United States which it would be extremely difficult to segregate, classify, and compare by annual average amounts, according to United States tariff treatment of similar products from other countries over the 302-year period included in Tables 11 and 12.

Philippine coconut oil first received a United States tariff preference under the emergency tariff act of 1921, when the oil was transferred from the general free list to the dutiable schedules.

Tables 13 (A) to 13 (S) show, respecting each leading commodity brought into the United States from the Philippines, the relative importance of that commodity among all imports from the Philippines, the proportion derived from the Philippines of United States total imports of that commodity from all sources, and the average computed ad valorem equivalent of United States import duties nominally waived respecting each item. Each of these tables deals separately with one of the commodities named in Table 13.

Philippine Sugar Movement to the United States, 1910 to 1929–30.

Table 14 shows the annual exportation of sugar, in long tons, from the Philippines to the United States and to all countries from 1885 to 1894, and from 1899 to 1929.

Under the act of July 1, 1902, a limitation of 1,024 hectares (2,530 acres) was placed by Congress on landholding in the Philippines by agricultural corporations. Under the congressional act of August 29, 1916, the Philippine legislature was empowered to legislate respecting landholdings in the islands, subject (in the case of public domain) to approval by the President of the United States, but that body has shown no disposition to remove the original limitation. This policy of limiting Philippine development by agricultural corporations has probably prevented further large-scale production of sugar and other agricultural commodities for export to the United States.5

Construction of the first modern centrifugal sugar factory in the Philippines was not begun until 1910, after the inauguration of dutyfree Philippine trade with the United States. Before that date only muscovado sugar was shipped from the Philippines to the United States. In 1928 the Philippine Sugar Association reported 38 centrifugal sugar mills in operation in the islands, with a daily cane capacity of about 47,630 metric tons (46,877 long tons). Before 1918 muscovado sugar exceeded centrifugal sugar in Philippine shipments to the United States, but since that year centrifugal sugar has uniformly predominated, except during 1920, when world sugar prices were exceptionally high.

A comparison of the average annual acreage in sugarcane cultivation and of the average yield in raw sugar per acre in the Philippines, during different consecutive periods since the inauguration of dutyfree trade with the United States, indicates average increases in both acreage and yield to the end of 1928, but the average yield increased considerably more than the average area in cane cultivation during the six years 1923-1928 (following enactment of the United States tariff act of 1922), as compared with the six preceding years, 1917-1922.

In his report for 1928 Governor General Stimson makes the following statement: "Economic development is further controlled by historic Filipino policy toward their public land. Their experience during the Spanish régime with large accumulations of land and other property in the hands of the friars, and the consequent tyranny fron which they suffered, not only resulted in the passage of laws, under the American régime, strictly limiting the size of such landholdings in the future, but has also resulted in a general public sentiment against such large landholdings which is one of the strongest political sentiments which the average Filipino holds to-day. It is so strong as to be controlling upon their future legislation and can not be disregarded in any plan for the future development of the islands. The average Filipino believes that it is better for his country to be slowly and gradually developed by a population of comparatively small individual landowners than to be more rapidly exploited by a few large corporations which own the land and till it either with tenant farmers or hired employees. The existence of this native sentiment has not been generally recognized in the United States, but the events of my own year's experience brought it to my attention as one of the deepest and most controlling currents of public opinion in the islands and one which it would be folly to disregard or attempt to defy. In other words, I believe it is clear that agricultural development in the Philippines of a character which requires the coordinated production of large tracts of land must be reached by the cooperative efforts of a large number of haconderos or landowners grouped about a common central which guides, fosters, and finances them under contract, rather than by large holdings in fee by single corporations."

Statistical Bull. of P. I., 1928, Table 40.

A more intensive cultivation of the sugarcane area is also indicated by increased Philippine importations of fertilizer, most of which probably was intended for sugarcane lands. During the calendar years 1922-1927, the average annual importation of fertilizers was $1,306,577, as compared with $62,586 during the six calendar years 1916-1921-a twentyfold increase; and during 1928 and 1929, respectively, fertilizers valued at $1,843,184 and $2,881,624 were imported. The following tabulation shows the Philippine area cultivated in sugar and the average yield per acre in various consecutive periods:

Philippine area in sugar cultivation and yield per acre for stated periods, 1911-1929

1 In regard to increased sugar production during 1929, the Secretary of Agriculture and Natural Resources for the Philippine Islands stated:

"This extraordinary increase is the result of the establishment of a number of additional sugar centrals in the islands, as it has been observed that such increase was registered in those Provinces where centrals are located, especially in the Province of Tarlac, where the biggest central in the world was erected last year." (Annual Report of the Governor General of the Philippine Islands, 1929, p. 167.)

Table 15 shows the reported Philippine area under sugarcane cultivation and the yield of raw sugar per acre during the fiscal years 1910 to 1929 and an approximate correlation of Philippine importations of fertilizer and sugar machinery during the same periods.

In 1912, for the first time since American occupation of the islands, sugar displaced manila fiber as the leading commodity in point of value shipped to the United States, but after that year manila fiber again held the leading position until 1920. From 1921 to and including 1929, Philippine sugar shipments to the United States in every year were much greater in value than manila fiber. No doubt the control of sugar shipments during the World War was an important factor in checking the increase in shipments of Philippine sugar to the United States during that period.

The increasing importance to the Philippines of sugar shipments to the United States, after its duty-free admission since 1909, is brought out clearly in the following table, which compares the value of shipments for the calendar years 1928 and 1929 with annual averages during the earlier periods indicated.