The hacienda system of agriculture was further encouraged and reached its full development under the U.S. colonial regime. The purchase of a mere portion of the friar lands by the U.S. government in 1903 from the religious corporations was a token act which did not solve the land problem. Persons other than those who had little or no land, especially the top running dogs of the colonial government, were the ones who were able to take advantage for the land policy. Landlords in authority combined with American carpetbaggers in titling to themselves public lands of commercial, agricultural and speculatory value.
As a result of the more rapid growth of a commodity economy under the U.S. colonial regime, the peasantry became more impoverished and the owner-cultivators who became bankrupt sold off their lands to old-type and new-type landlord usurers, merchants and rich peasants. The evils of the Spanish colonial regime were carried over to the U.S. colonial regime. A new feature of the economy was an increase in the number of proletarians. Soon enough a huge reserve army of labor and a relative surplus of population, mainly emanating from the peasantry, arose.
In exchange for the Philippine raw materials, U.S. finished goods were imported free of tariff duties under the Payne-Aldrich Act of 1909. In 1913, quota limitations on Philippine raw materials exported to the United States were completely lifted. The free trade between these two types of commodities perpetuated the colonial and agrarian economy. The increasing avalanche of finished goods into the country crushed local handicrafts and manufacturers and furthermore compelled the people to buy these finished goods and to produce raw materials mainly.
U.S. surplus was invested in the Philippines both in the form of direct investments and loan capital. Direct investments went mainly into the production of raw materials and into trade in U.S. finished products and local raw materials. Minor processing of raw materials was also introduced.
Mineral ores were extracted for the first time on a commercial basis. On the other hand, loan capital served to support foreign trade and cover trade deficits, convert pesos into dollars for profit remittances, pay salaries of American bureaucrats and business personnel, cover the needs of the colonial government for various equipment and the like. Every year, raw material production and, therefore, the exploitation of the people had to be intensified by the colonial regime in order to increase its rate of profit.
U.S. imperialism improved the system of transportation and communications as a means to tighten its political, economic, cultural and military control of the Philippines. U.S. corporations derived huge profits from public works contracts in the construction of more roads, bridges, ports and other transportation facilities. These public works in turn widened directly the market for U.S. motor vehicles, machinery and oil products. The colonial exchange of raw materials and finished products was accelerated. Troop movement for the suppression of the people also became faster.
The establishment of an extensive public school system and the adoption of English as the medium of instruction served not only to enhance the political indoctrination of the Filipinos into subservience to U.S. imperialism but also to encourage local taste for American commodities in general. It also opened the market directly for U.S. educational materials. The mass media was developed not only to spread imperialist propaganda but also to advertise all kinds of U.S. goods and, in particular, to sell various kinds of printing and communications equipment. Even the campaign for public sanitation and hygiene was a means to speed up the monopoly sales of U.S. drugs, chemicals and medical equipment.
In the first place, the depredations of the U.S. aggressors troops in the Filipino-American War had resulted in various kinds of pestilence and epidemics, especially cholera, which threatened the health of the imperialist conquerors themselves.
On the basis of the economic conditions bred by U.S. imperialism, a certain social structure was built up in the Philippines. The U.S. imperialists merely adopted as their principal puppets those exploiting classes which had collaborated most with the Spanish colonial rulers in the 19th century and retained them at the top of the Philippine society. These were the comprador big bourgeoisie and the landlord class. From the ranks of these exploiting classes, the U.S. imperialists chose their top political agents and trained them to become bureaucrat capitalists sharing in the spoils of the colonial government. At the base of the society were the toiling masses workers and peasants who comprised more than 90 per cent of the people. During the U.S. colonial rule, the proletariat increased in number to the extent that the semifeudal society became reinforced with the quantitative increase of raw material production, trade, transport and communications facilities and minor manufacturing. But the peasantry remained the majority class in the entire society.