KARL MARX TUESDAYS

PHILIPPINE SOCIETY AND THE REVOLUTION AGAINST THE PHILIPPINE DEMOCRATIC GOVERNMENT

By: Comrade Mark Cua

II. US Imperialism

U.S. Monopoly Control of the Philippines

In an uneven and spasmodic way, U.S. surplus capital has been invested in the Philippine economy. At present the U.S. monopolies and their local subsidiaries own or control such businesses involving petroleum,14 tire and rubber, drugs, fertilizers, chemicals, mining, heavy equipment, marketing, transport facilities and others. The majority of the biggest corporations in the Philippines today are American. They control at least 50 per cent of the total business assets in the country. The book value of these U.S. private assets is at least $2.0 billion, according to available sources in 1969.15 The market value is several times higher. These assets represent at least 60 per cent of the total U.S. private investments in Southeast Asia. Of the total foreign private investments in the Philippines, U.S. investments constitute 80 per cent. The volume and value of U.S. investments in the Philippines are even greater today than during the period of direct U.S. colonial rule when U.S. private investments reached the level of P537 million or $268.5 million (based on Bureau of Census and Statistics figures).

The magnitude of U.S. investments is not the only thing that weighs down heavily on the Filipino people. It is also their strategic position. For instance. petroleum (supplied by Esso, Caltex, Mobil, Filoil and Getty Oil)16 is overwhelmingly, under the control of the U.S. oil monopolies. By this commodity alone, U.S. monopoly capitalism controls every other commodity transported or processed in the Philippines. The U.S. oil monopolies supply more than 90 per cent of the country’s energy requirements. Tire production, trade in construction materials, import-export and the wholesale trade are also controlled by foreign firms, chiefly American. They control bulk sales to end-consumers like big utility plants. Though U.S. capitalists appear to, have withdrawn from the field of public utilities, they sold a great portion of their shares in the Meralco (electricity) and P.L.D.T. (telephone) only after burdening these firms with U.S. loans and after securing guarantees from government financing institutions. These enterprises remain as sources of huge interest payments and are increasingly subject to being retaken over through bonds floated in Wall Street.

The U.S. imperialists own the largest commercial banks, insurance companies and other financing institutions. They therefore control the Philippine banking system. They grab the domestic savings of the people and utilize these to support U.S. enterprises here. In this regard, an oft-cited case ofYankee cleverness is the original capitalization of the Philippine-American Life Insurance Company at less than a million pesos and its rapid growth into a billion-peso corporation in a matter of two decades after the last war. U.S. firms secure credit not only from local U.S. banks but also from Philippine-owned banks. Another flagrant case of Yankee rapaciousness can be seen in gold production. For a long period of time under the Gold Subsidy Law, the Central Bank bought gold from Benguet Consolidated and other U.S. mining companies at $57 to $67 per ounce, that is to say, $22 to $32 above what was then the world price of $35 per ounce.

During the period of 1960 to the middle of 1969, foreign investors (principally American) borrowed P13.5 billion from local credit sources. For the period of 1962-68, U.S. firms alone were able to borrow P8.0 billion in clear pursuit of old imperialist practice and also in clear application of the U.S. policy of exhausting local credit sources in colonies and semicolonies so as to help ease the U.S. balance of payments crisis. A study of 108 U.S. firms supposedly accounting for 70 per cent of U.S. investments in the Philippines, reveals that 84 per cent of their capital and operational funds came from Philippine sources and only 16 per cent (including reinvested profits made in the Philippines) came from the United States in the period of 1956-65. During the same period, these 108 U.S. firms remitted home more than $386 million, close to seven times the actual total of new investments ($58.5million ) that they brought into the Philippines. The increase in paid-up capital of these firms was only $28 million from a base of $74 million in 1956 to a new level of $102.5 million in 1965 while their remitted superprofits was more than 1,300 per cent of such measly increase in paid-up capital.

Central Bank statistics show that during the period of 1960-69, foreign investors, mostly American, brought in $160 million in the form of new capital investments and brought out at least $482 million in the form of capital withdrawals and profit remittances. Huge profit remittances by U.S. firms are not a new development. When in the fifties there were foreign exchange controls and U.S. firms were encouraged to plow back their profits into the local economy, they invested the paltry amount of $19.2 million only to remit $215.1 million. U.S. statistics easily admit that the rate of profit from U.S. investments in the Philippines is more than 25 per cent higher than the average rate of profit from U.S. overseas investments in general.17

The profit remittances of U.S. firms were officially reported by the Philippine reactionary government as reaching tens of millions of dollars annually during the sixties, specifically an average annual rate of a little over $40 million. Nevertheless, there were unidentifiable transactions in Central Bank records amounting to several hundreds of millions of dollars every year, ostensibly for the payment of imports, travel abroad, and several other transactions involving the disbursement of foreign exchange. According to estimates made by the Economic Monitor, the U.S. firms holding $500 million investments in the Philippines made remittances arnounting to $2.2 billion from 1962 to 1969 or an annual average of $316 million. On top of this, dollar payments for miscellaneous invisibles totalled $2.7 billion or an annual average of $304 million. The Americans for Peace in Indochina, an association of Americans in the Philippines opposed to the U.S. war of aggression, claims that in 1969 alone, U.S. investors remitted $3.0 billion from the Philippines.

A clever method of profit remittance by overseas U.S. firms is the purchase of commodities and services from their mother or sister companies in the United States at an overprice. U.S. firms engaged in export and re-export business in the Philippines underprice their goods only to get the real prices and the real profits abroad. A variation of this involves the export by U.S. mining companies of copper concentrates and iron ores with substantial gold, silver, nickel and other components which are not fully accounted for in the country.

Because of the colonial and agrarian character of its economy the Philippines is highly dependent on a colonial pattern of trade that is to say, the exchange of local raw materials and foreign finished products, especially American. In a vicious cycle, the colonial pattern of trade which has been developed for a long period of time by U.S. imperialism through preferential trade and the quota system has in turn served to perpetuate the colonial and agrarian character of the Philippine economy. At first glance, it looks as if free trade has been favorable to the Philippines but on an examination of the accounts it is clear that only the U.S. imperialists and the comprador-landlord cliques in the Philippines have been favored. At the height of free trade under the Bell Trade Act from 1946 to 1954, the United States exported to the Philippines $2.0 billion worth of goods duty-free and the latter exported to the former only $889 million worth of goods duty-free.

By the nature of its exports the bulk of which comprises sugar, logs, lumber, coconut products, abaca, tobacco and unprocessed minerals, the Philippines cannot earn enough U.S. dollars to pay for the importation of foreign manufactures coming principally from the United States which command higher prices. As of 1968, only 8.3 per cent of Philippine exports could be categorized as manufactured goods. The Philippine economy is so uneven and lopsided that it has to import even such agricultural products as poultry and dairy products, cereals and cereal preparations which are still in the bracket of the ten top imports. In the world capitalist market, the foreign monopolies consistently jack up the price of their manufactures and other products and force down the price of raw materials that they purchase from the colonies and semicolonies like the Philippines. The result is chronic deficit in the foreign trade of the Philippines. The annual foreign trade deficit rose from $147.1 million in 1955 to $249.7 million in 1967 and to $301.9 million in 1968. The rapid rate of increase in deficit is due to the effects of U.S. imperialism and all other imperialist powers to squeeze out more profits from their foreign trade as a measure of facing up to their own balance-of-payments problem. They are now viciously trying to pass on the burden of their general crisis to their colonies and semicolonies by stepping up their own exports, by exporting inflation, by forcing weaker countries to devalue their currencies and by practising usury.

The economy has no capital-goods industry and the structure of local manufacturing has not changed at all.18 As of 1968, 75.5 per cent of manufacturing output went into non-durables like food, beverages, cigarettes and cigars, textiles, footwear, paper, rubber, chemicals and the like. Twenty-four and three-tenths per cent went into the manufacture of such durables as furniture and fixtures and mere reassembly of machinery, metal products, appliances, motor vehicles and the like.

It is bandied about that during the last two years, the Philippine reactionary government made heavy dollar expenditures because it imported mainly machinery, transport equipment, fuel and raw materials for domestic processing. What is falsely implied is that the Philippines is rapidly industrializmg. This is a big lie because these imports have been mainly for public works projects, construction of office buildings and sugar mills, mineral extraction, spare parts, motor vehicle and home appliance reassembly and other such so-called intermediate industries as textile, flour and steel mills that rely on imported yarn, wheat and steel sheets.

Maintaining the colonial economy in an artificial way, the Philippine reactionary government has incurred an internal debt of at least P6.0 billion and an external debt of $1.9 billion (as of June 1970)19 mostly from U.S. banks at high interest and on short term basis. These debts have resulted in a steep inflation and devaluation. As a semicolony, the Philippines cannot continue to operate without an adequate supply of U.S. dollars. And yet, as it tries to acquire such, it is bogged deeper in colonial exploitation and crisis. Because of the chronically inadequate dollar earnings of Philippine raw materials, the reactionary government has to beg the U.S. monopoly banks and the international financial institutions under U.S. control for more loans at increasingly onerous terms. The Philippines is mortgaged and auctioned off so easily. The critical point has been reached in foreign borrowings so much so that devaluation has been repeatedly imposed on the peso currency and the reactionary government has already become hysterical even only on the matter of “restructuring�? its old debts. But it must still get new loans on more onerous terms in order to be able to import the finished goods which its colonial economy does not produce. The Marcos puppet clique is bent on increasing the foreign debts of the Philippines by asking for the authority to borrow another $1.5 billion within the next four years.