Saturday, October 13, 2012

THE RECTO READER: Parity Rights, Currency Dependence, Foreign Loans versus Foreign Investments, Part 2E of 6

"The truth of the matter is that most of the people, outside of the Filipinos, who favor this bill are fundamentally opposed to Philippine Independence. Many of them have told me so. Their whole philosophy is to keep the Philippines economically even though we lose them politically." - U.S. Senator Millard Tydings, U.S. Congressional Record on Public Hearing of the Bell Trade Act, March 1946

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Hi All,

The late Senator Claro M. Recto, was one of our most intense and consistent nationalist in Philippine history. In retrospect, I find it unfortunate that I was not politically aware during his lifetime since his time was during my early teen years. I became aware of and remember Recto only when our Father Superior mentioned that the latter, whom he labeled a "communist," just died while in Rome (Recto was a target of CIA Assassination Plots; makes me think too of young and outspoken Capt. Rene Jarque who suddenly died of heart attack while abroad, like Recto).

Anyway, it was only after I bought THE RECTO READER did I start "knowing and learning from" Recto and beginning to appreciate nationalism, that is, Filipino nationalism. It was only after reading the book did I get information and developed a greater understanding of our national predicament. 

The Marcos Dictatorship, after the 50-year American intervention, occupation and colonization of our homeland overtly and covertly muted our nationalism, was instrumental in pushing back the struggle for nationalism, making mileage of the usual "fear of communism"as an excuse to obtain more aid from the United States and to maintain his position of power and those of his cronies and military backers. 

So did his successors Cory Aquino, Fidel Ramos, Joseph Estrada, Gloria Arroyo, and currently Benigno Aquino III and most of their legislators; all --while paying lip service to the uninformed majority-- were more attuned to the desires of, and acted/act for foreigners and foreign institutions; their local partners and supporters; all at the expense of us native Malay majority who consequently became a minority (in terms of decision-making  in our own native land). For how long shall we allow such traitorous rulers?

In the last half-century since our so-called independence, all these rulers have not really ruled for the betterment of the native Filipino. It is truly sad and maddening that our recent and present rulers since the Marcos Dictatorship have actively allowed the neglect of fostering Filipino nationalism in our society. 

Such has happened because our native rulers, bureaucrats and technocrats in government, business and military themselves have no nationalism as we understand it. In lieu, they have time and again planned, decided and acted to please the foreigners/aliens; in short they have literally prostituted our native people and homeland. Gradually, foreigners have established themselves in our own "house" and have influenced changes in it to suit them. 

It therefore behooves us the citizenry to force and make the rulers, whoever they are now and in the future, to work for the common tao (masa). And Filipino nationalism should be the bottomline for all plans, decisions and actions. It would be extremely beneficial for our homeland and our countrymen to become aware of, that within our territory, today and the future, through our homes and schools, of nationalism. Filipino nationalism is the missing link to correctly plan for, decide and act towards the realization of our common good.

It is great that we had Recto and Constantino in the recent decades to expound on Filipino nationalism and though they now are both gone, they live in their writings on nationalism. We Filipinos need mass education for nationalism to reverse the present dumbing down of the native Filipino. We need to overcome the impediments to Filipino nationalism

Armed with knowledge and understanding of our Filipino nationalism, we know we can change as a people, truly united with chosen nationalist leadership (not lapdogs of foreigners as we had since so-called independence in 1946) towards completing and attaining the goals of the unfinished revolution our revolutionary forefathers fought and died for.

As long as we natives do not appreciate and regain our national consciousness, our nationalism, we will never earn any respect as a sovereign people, from fellow Asians, from other peoples of the world and those aliens and foreigners in our land who are greatly benefiting from our lack of nationalism, from our resultant lack of national unity. We native Filipinos have to fight back to regain our homeland, peacefully or not; if not for ourselves now, surely for our next generations of native Filipinos.

Let's now start reading and learning from Recto the "what, why, how, where and when" of authentic Filipino nationalism, the sine qua non for really loving our native land, now as he did then: thinking, planning, deciding and acting for the homeland and our native people.

NOTE: I added at the bottom of post a short bio of the late Sen. Claro M. Recto, by the Civil Liberties Union, 1990, his Centennial year.

- Bert

Parity Rights

This parity clause, it need not be said, is grossly unfair. This is, indeed, the first instance in history where an independent nation has granted to citizens of another rights equal to those enjoyed by its own citizens. 

The irony of the thing lies in the fact that were we to seek, for the sake of reciprocity, the same rights from the United States.....we would be met with the observation, which is unanswerable, that it is not within the power of the United States government to grant any such equal rights to citizens of another country.

 As the State department representative apologetically said during a committee bearing: " I feel they (the Filipinos) should not be forced to give American citizens special rights which we can not give to Filipino citizens."

It would also be naive to think that the U.S. would ever agree to give similar parity rights to the citizens of any other country even if they had the constitutional power to do so. Representative Carlson was certainly speaking the minds and hearts of the American people when, on the floor of the U.S. Congress, during the discussion of the Bell Bill, he observed: "In all fairness, I think, we might ask ourselves if we, as citizens of the United States, would agree to the same requirement (parity rights) were they submitted to us by another nation." (31)


Many of us believe that we are "independent." We are often complimented by our big "partner" in the "special relationship" that we are independent. But he behaves and acts towards us in a manner that indicates quite the contrary. he imposed upon us ten years ago the Bell Trade Act-1946, together with "Parity"

After nine years of Filipino opposition and agitation against the Trade Agreement ,he finally consented to revise it, but parity has remained --nay, it has been extended to all fields of economic endeavor -- far beyond its original scope in 1946 which was confined to the ownership and exploitation of natural resources and public utilities. No other independent country in the world except ours has granted parity rights to the citizens of another. (32)

Our Currency Dependence

One of our recurring economic headaches is the low level of our dollar reserves. That we need dollars is a fact, but we should not be over-dependent on the dollar, we should not be morbidly dollar-conscious. The interest which other countries have shown in our products proves that we could develop other markets and expand our trade with them if only we did not insist on dollar payments. 

Those countries who want to buy from us also have goods which we could use. Only our fear of untying ourselves from Mother America's economic apron-strings prevents us from developing more profitable trade relations with other countries.

Of course, certain foreign interests which may be adversely affected by our new outlook would try to exert pressure on our government to scrap such a plan. That is only natural, but the danger is that a leadership that is not nationalistic  might bow to such pressure. This is what is happening in the past

But a leadership which sincerely proclaims its adherence to the principle of economic nationalism will push ahead resolutely with only one purpose in mind -- the well-being of the Filipino people, now and in the future.

Although it must be admitted that there is a need for dollars for the importation of capital goods from abroad, it should not be overlooked that in any industrialization we have to depend mostly on internal financing. The reason is obvious. For payment of wages, which constitutes the bulk of the cost of production, and of raw materials locally produced, we use our currency. We only need dollars or yens or pounds for foreign purchases.

I am afraid we have become unduly dollar-conscious, as if our economy depended on all circumstances on the dollar. That is, I believe, a mischievous error, obviously inspired and fostered by those who will benefit from our continued dependence on the dollar. It is, therefore, necessary to emphasize the fact that in any economic development the chief instrument of the entrepreneurs is the local currency --the peso, in our country --and not the dollar. (34)

Foreign Loans, Foreign Investments

Capital is always necessary in economic development. Other things being equal, the greater the capital the larger the production and the faster the rate of economic growth. In our present state, considering the scarcity of Filipino capital, there is a need for foreign capital if we expect any acceleration in our economic development. 

But the foreign capital we need is for the purchase of capital goods which we cannot produce or manufacture locally. Foreign capital in excess of what is necessary to meet this particular need will do us more harm than good.

I have repeatedly stressed my preference for foreign loans at reasonable rates of interest. They are not a substitute for internal financing, but merely a complement to it, and will take care only of those functions that internal financing cannot at present perform , such as the procurement of capital goods. But under any and all circumstances, foreign loans should be preferred to foreign direct investments because the latter mean foreign ownership of the business and the profits.(35)

Our opposition to foreign direct investments is not, I repeat, the result of a purely emotional nationalism. In fact  such a chauvinistic attitude devoid of all economic substance could even prove harmful in some cases. That economic substance may be simply described thus: industrialization of the country by Filipino capitalists, and not simply prevention of industrialization by foreign capitalists; exploitation of our natural resources by Filipino capital; development and strengthening of Filipino capitalism  not of foreign capitalism; increase of national income, but not allowing it to go mostly to non-Filipinos. (36)

The Difference Between Foreign Loans and Foreign Investments

Here it is necessary to explain briefly between foreign loans, public and private, and foreign direct investments. When we borrow money from abroad, say from the U.S., to use for our economic development, the Filipinos became the capitalists. They will pay interest to their foreign creditors, but through the use of credit they would make profits well above the interests they will have to pay. Thus our capitalists would retain the profits. 

On the other hand, if foreigners export here their direct investments, they naturally reap all the benefits and  if allowed to do so, they would take them away from the country. Outside, therefore, of wages paid to our workers and taxes paid to the government, all the fruits of our economic efforts and natural resources would go to foreign capitalists, not to our own. In short, foreign loans are what we need, not foreign direct investments which would in the long-run strangle us economically.(37)

Why Foreign Direct Investments Can Not Bring Prosperity

Even if foreign direct investments would afford some local employment to local labor, that would not help in our domestic capital formation because salaries and wages are, as a rule, all spent on daily needs and are not saved. They are hardly ever a source of capital formation. Inasmuch as profits and savings therefrom are the only sources of capital formation, those profits that belong to foreign capital can not help promote our own capital formation; consequently, there is no increase in our capacity to produce. 

We remain, in the end, poor and underdeveloped, When foreign investors send home their income, capital, and savings, then we shall be back where we were before they were "attracted," perhaps in a worse condition, where we might even have to beg the foreign investors to keep their investments in the Philippines not to enrich us but just to be able to give some employment to our laboring class.(38)

Parity and Foreign Investments

Parity opens the door to foreign direct investment. In fact, foreign investment constitutes the very motivation for parity rights. The wider the door the more easily such foreign investments will enter. And with the doors of Japan and the 20 Latin American republics and the Colombo powers shut against foreign investments, the more they would be funneled into our open door.

Further enlargement of parity rights means something more: it will make it more difficult for us to obtain American loans. For why should American capitalists lend at 2% to 4% interest when they earn more than ten times that amount in profits through direct investments?....

It is well to remember again the experience of Latin America. The Latin-Americans had no parity with the United States. It was superior experience of American business in technique, organization, know-how, etc. --the result of a much earlier industrial development --which caused the displacement of Latin-American businessmen in Latin America and retarded the growth of local, native, industrial capitalism in that area. Our own need to protect ourselves from that superiority is greater than that of the Latin Americans because of the parity rights enjoyed by U.S. citizens and corporations in the Philippines.

A a distinguished Filipino economist pointed out on one occasion, "because of the overwhelming advantage in industrial efficiency which the U.S. enjoys, it would be impossible for the Philippines to achieve even moderate progress in industrialization unless some form of protection is afforded its infant industries." The imperative need of the Philippines to protect itself from an economic invasion by one possessed of such "overwhelming advantage of industrial efficiency," could not have been expressed more clearly.

The task is admittedly difficult. The difficulty lies in the fact that a nation that accepts military protection from a stronger power necessarily reduces its political power to protect itself from its protector in other fields, as, for instance, that of economic competition.(39)

The Example of Puerto Rico

Puerto Rico has been presented to our leaders as the show-window of industrialization and economic development. many have been invited to witness the prosperity of Puerto Rico. Indeed that country is rich and prosperous, territorially speaking, and is bound to become more so. But are the Puerto Ricans themselves prosperous? They are not, because the wealth of Puerto Rico is concentrated in the hands of foreign investors. Puerto Rico was challenged to accept an offer of national independence if the people wanted it. The "elected" representatives of the people overwhelmingly voted against independence.

What will be our fate, if our country became industrialized along the same lines followed and by the same method used in Puerto Rico? With foreign direct investments financing our industrialization , and with the economy passing gradually into foreign hands, not only shall we be poorer than ever but even our political independence would dwindle into insignificance. The fate of "prosperous" and willfully colonial Puerto Rico must be neither forgotten nor overlooked.(40)

(31) Our Trade Relations with the United States, April 4, 1954.
(32) A Realistic Foreign Policy for the Philippines, August 18, 1956.
(33) The Role of Labor in Our Economic Emancipation, September 8, 1957.
(34) Economic Nationalism, March 28, 1957.
(35) The Need of Foreign Loans in Our Economic Development Program, May 18, 1960.
(36) to (40), see (32)

To be continued........Part 3 FOREIGN AFFAIRS

"Let us not ask for miracles...let us not ask that he who comes as an outsider to make his fortune and go away afterwards should interest himself in the welfare of the country. What matters to him the gratitude or the curses of a people whom he does not know, in a country where he has no associations, where he has no affections? Fame to be sweet must resound in the ears of those we love, in the atmosphere of our home or of the land that will guard our ashes; we wish that fame should hover over our tomb to warm its breath the chill of death, so that we may not be completely reduced to nothingness, that something of us may survive. Naught of this can we offer those who come to watch over our destinies."..- filosofo Tasio to Ibarra  (NOLI ME TANGERE.), quoted in Hernando J. Abaya's THE UNTOLD PHILIPPINE STORY, 1967


Claro M. Recto (1890-1960) was a Philippine nationalist leader and president of the 1934 constitutional convention. He was one of the most vocal advocates of Philippine political and social autonomy.
Claro M. Recto was born in Tiaong, Tayabas, on Feb. 8, 1890. He worked for a bachelor of arts at the Ateneo de Manila and finished a master of laws degree at the University of Santo Tomas in 1914. From 1916 to 1919 he served as legal adviser to the Philippine Senate. In 1919 he was elected as representative of the third district of Batangas and served as House minority floor leader. He was reelected in 1922 and 1925.
Framing of the Constitution
In 1924 Recto went to the United States as a member of a parliamentary independence mission. In the same year he was admitted to the U.S. bar by the Supreme Court. In 1934 a constitutional convention was held in accordance with the provisions of the Tydings-McDuffie Act, which required the drafting of a constitution as part of the steps leading to Philippine independence. Recto was elected president of the convention. It was due mainly to Recto's sagacity and intellectual acumen that the convention succeeded in framing and approving on Feb. 8, 1935, a constitution which would truly reflect the Filipinos' capacity to frame laws and principles that would govern their lives as free, responsible citizens in a democracy.
In 1931 Recto was elected to the Senate on the platform of the Democrata party. He acted as minority floor leader for 3 years. In 1934 he became majority floor leader and president pro tempore of the Senate. He subsequently resigned his Senate seat when President Franklin Roosevelt appointed him as associate justice of the Supreme Court. Recto left the Supreme Court in 1941 and was elected anew as senator. In 1949 he was reelected on the Nacionalista party ticket. In 1957 he ran for president but was defeated.
Apart from his numerous legal treatises and literary works in Spanish, Recto is noted for his staunch nationalist stand on questions regarding political sovereignty and economic independence.
World War II and Rehabilitation
Recto served in the wartime Cabinet of José Laurel during the Japanese occupation and was subsequently arrested and tried for collaboration. He wrote a defense and explanation of his position in Three Years of Enemy Occupation (1946), which convincingly presented the case of the "patriotic" conduct of the Filipino elite during World War II. Recto fought his legal battle in court and was acquitted.
On April 9, 1949, Recto opened his attack against the unfair impositions of the U.S. government as expressed in the Military Bases Agreement of March 14, 1947, and later in the Mutual Defense Treaty of Aug. 30, 1951, and especially the Tydings Rehabilitation Act, which required the enactment of the controversial parity-rights amendment to the constitution.
A Radical Gadfly
Recto's wit, irony, and sharp analytic powers exposed the duplicity of the diplomatic agreements with the United States and revealed the subservience of Filipino opportunists to the dictates of American policy makers. Recto opposed President Ramon Magsaysay on a number of fundamental issues, among them the Philippine relations with the Chiang Kai-shek regime in Taiwan, the Ohno-Garcia reparations deal, the grant of more bases to the United States, the American claim of ownership over these bases, the question of expanded parity rights for Americans under the Laurel-Langley Agreement, and the premature recognition of Ngo Dinh Diem's South Vietnam government. In all those issues, Recto's consistent stand in favor of Philippine sovereignty and security was proved right by the turn of events.
In perspective, Recto revived the tradition of the radical dissenter fighting against feudal backwardness, clericofascist authoritarianism, and neocolonial mentality and imperialism. He strove to reawaken the consciousness of the Filipinos to the greatness of their revolutionary heritage and emphasized the need to transform the character of the national life by reaffirming their solidarity as a sovereign, free people.
Recto was preparing to launch his Filipinist crusade in the tradition of the Propaganda Movement of the 1880s when he died of a heart ailment in Rome, Italy, on Oct. 2, 1960.
Further Reading
For Recto's ideas and attitudes see his own books, Three Years of Enemy Occupation: The Issue of Political Collaboration in the Philippines (1946); My Crusade (1955); and Recto Reader, edited by Renato Constantino (1965). The best biographical account from a nationalistic sociocultural point of view is Constantino's The Making of a Filipino: Story of Philippine Colonial Politics (1969). For other information about Recto's career consult Hernando J. Abaya, The Untold Philippine Story (1967). For a thoughtful appraisal of Recto's progressive tendencies by a young intellectual see José Maria Sison, Recto and the National Democratic Struggle (1969).
Additional Sources
Arcellana, Emerenciana Yuvienco, Recto, nationalist, Philippines: Claro M. Recto Memorial Foundation, 1988.
Arcellana, Emerenciana Yuvienco, The social and political thought of Claro Mayo Recto, Manila: National Research Council of the Philippines, 1981.
Claro M. Recto, 1890-1990: a centenary tribute of the Civil Liberties Union, Quezon City: Karrel, 1990?.

"The free trade relationship, which encouraged producers to concentrate on a few export crops, meant the continuation of a dependent and predominantly agricultural economy in the Philippines." - Shirley Jenkins, American Economic Policy Towards the Philippines, STANFORD UNIVERSITY PRESS, 1954.

                                  Alejandro Lichauco on American neocolonialism in the Philippines

The chief business of America is business" - President Calvin Coolidge, 1925

"The glory of the United States is business" - Wendell L. Willkie, 1936

"Reciprocal free trade drastically limited Philippine ability to protect native manufacturing and radically stimulated a taste for American consumer goods. Money which might have gone, in a more austere culture, into capital investment, instead went into luxuries and prestige purchasing.". -  Theodore Friend, BETWEEN TWO EMPIRES: 1929-1946, YALE UNIVERSITY PRESS, 1965

 “Colonies do not cease to be colonies because they are independent” – Benjamin Disraeli, British Prime Minister (1804-1881)

"We have about 50% of the world's wealth but only 6.3% of its population.... Our real task in the coming period is to devise a pattern of relationships, which will permit us to maintain this position of disparity without positive detriment to our national security. To do so,we will have to dispense with all sentimentality and daydreaming, and our attention will have to be concentrated everywhere on our immediate national objectives. We need not deceive ourselves that we can afford today the luxury of altruism and world benefaction.... We should cease to talk about vague and unreal objectives such as human rights, the raising of the living standards, and democratization. The day is not far off when we are going to have to deal in straight power concepts. The less we are then hampered by idealistic slogans, the better." George Kennan,U.S. Secretary of State Memo, 1948

"The selfish spirit of commerce knows no country, and feels no passion or principle but that of gain" - Thomas Jefferson, 1809

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Hi All,

The below link will show a short list of my past posts (out of 540 posts so far) which I consider as basic topics about us native (indio)/ Malay Filipinos. This link/listing, which may later expand, will always be presented at the bottom of each future post.  Just point-and-click at each listed item to open and read. 

Thank you for reading and sharing with others, especially those in our homeland.

- Bert

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Bert M. Drona said...

Hi All,

Please note the below statement regarding a major and disastrous impact of Parity Rights on our national patrimony; and consequent generational poverty of the native Filipino majority.

CONCLUDING OBSERVATIONS: (Extracted from " Alien Interests in the Land (1900- Present)" - Prof. Perfecto V. Fernandez, U.P. Claro M. Recto Professorial Chair on Constitutional Law, 1984-1986.)


Under the Constitution of the Philippines (1935 as well as 1973), one of the broad objectives postulated for the Government is "to conserve and develop the patrimony of the Nation" which is set forth in the Preamble.

From the foregoing exposition, however, the National Patrimony (in the sense of public domain) has been steadily dwindling, and may reach the vanishing point before the century ends.

Stress must be given the fact that, to begin with, the National Patrimony had been greatly reduced by the beginning of this century. Much of the best lands had been taken over by the Church and its religious orders, and vast tracts had been deeded by the Spanish monarchs under royal grants.

All these became vested rights under the Treaty of Paris, and the episode of the Friar Lands only underscore the problem of getting back choice lands once they get into alien hands.

During the long period of Spanish rule, the lands taken by the colonizers were arable and residential lands.

During the much shorter period of American colonial rule, the choice of the colonizers shifted to mineral and timber lands.

Some of the richest deposits of valuable ore were taken over by Americans and their companies, and most of what was taken have remained in their hands.

Such alien acquisitions continued during the Commonwealth period, and also during most of the life of the Republic up to this time, by force of the Parity Amendment.

Under the present Constitution, the alienation of the remaining National Patrimony has taken other forms. Large tracts have been given away under management or service contracts with the Government, and even larger areas could be placed under alien hands through international

The situation is aggravated by alien take-over of private landholdings under management contracts, and to a lesser degree, under increasing resort to growers' agreements.

There is bitter irony in the situation that has emerged, that the sovereign power of the Filipino people expressed through their fundamental law, is used to maintain alien control and enjoyment of the lands taken from the Nation.

(Source: U.P Philippine Law Journal, Volume 59-1984)

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