Saint Mary’s University
SCHOOL OF ACCOUNTANCY AND BUSINESS
Bayombong, Nueva Vizcaya
Economic Development During Manuel Luis
Quezon y Molina Presidency
1935-1944
Group 2
Cabradilla, Aaron
Jacinto, Mary Sunshine
Mangansat, Charlene
Pagaduan, Rhea Mae
Manuel Luis Quezon y Molina was a statesman,
soldier, and politician who was the first elected
Filipino to head a government of the entire
Philippines, even though he is considered the second
president of the country after Emilio Aguinaldo.
During a career that spanned the length of America’s
colonial rule in the Philippines, Manuel L. Quezon
held an unrivaled grasp upon territorial politics that
culminated with his service as the commonwealth’s
first president (1935-1944).
The Philippine Commonwealth was the name of the
Philippines from 1935 to 1946 when it was still
controlled by the United States. The Philippine
Commonwealth was created by the Tydings-
McDuffie Act (which provided for full independence
for the Philippines 10 years after the creation of a
constitution and the establishment of a
Commonwealth government that would be the
forerunner of an independent republic), which was
approved by the U.S. Congress in 1934.
 Manuel L. Quezon made several institutions
and programs to attend to the needs of the
economy on his term. Healthy economy is
hard to establish back then because we
became independent on U.S.
 The economy of the Commonwealth was
mostly based on farming agriculture-
based. Farmers grew abaca, coconuts and
coconut oil, sugar, and timber. Other foreign
income came from money spent at the
American army, navy, and air bases on the
Philippines, such as the naval base at Subic
Bay and Clark Air Base.
 The performance of the economy was
initially good despite challenges from
various agrarian uprisings. Taxes collected
from a robust coconut industry helped boost
the economy by funding infrastructure and
other development projects.
Situation of Philippine economy during the
Commonwealth on Quezon regime
 Philippines became dependent on the United
States and agriculture was developed but
mainly for export. By 1934 (before Quezon’s
regime), 80% of the total Philippine export
went to the US and 65% of Philippine
imports were from US
 The availability of American products had
discouraged the industrialization of the
Econ Dev | Group2 (Cabradilla, Jacinto, Mangansat, and Pagaduan)
Philippines and destroyed certain
noncompetitive local industries; the
American market was now being closed to
the Philippines by the erection of tariff
barriers, regardless of the fact that none of
the neighboring countries could offer
alternative outlets for Philippine products.
 As serious as Philippine dependence on the
American market was the fact that the
Filipinos did not control their economy.
Mining, public utilities and industrial sectors
of the economy were heavily capitalized by
American market.
 The Chinese controlled 75% of retail trade
and operated credit facilities, directed and
financed the production of rice and other
staples.
 Japanese activity in the Philippines increased
with the inauguration of the Commonwealth
and the waning of Depression.
The export-driven economy
 In 1936, when the country had experienced
its first year of the Philippine
Commonwealth, the country’s total exports
was $136.4 million and imports $101.2
million, so that total trade was $237.6
million.
 The country’s population was around 15.5
million, so that for every Filipino, there was
a per head total trade amounting to $15, and
exports per head at $9.
 The numbers appear low in today’s dollar
values, but in 1936, the US dollar and its
coins could buy many things since the price
of most necessities were low. The peso was
fixed at two pesos to a US dollar. Year1936
was a good year from a trade viewpoint
because the peso was strong.
 Two groups of exports – products from sugar
and from coconuts – accounted for 67.9
percent of all export earnings and that 82
percent of these were bought by the
American market.
In 1936, sugar exports accounted for $62.9
million (44%) of all export earnings. Coconut
products made up a similar amount but had a
slightly more diverse market direction. The share
of the American market for these exports rose to
90.7 percent. Abaca exports had a worldwide
market, especially among maritime countries in
Europe and Japan. Cigar exports were highly
thought of during this period. There were home-
based industries that required labor-intensive
piecework activity. The most active among these
was that based on embroideries, a forerunner of
the garment export trade among developing
countries.
 Saint Mary’s University
SCHOOL OF ACCOUNTANCY AND BUSINESS
Bayombong, Nueva Vizcaya
Canned pineapple exports ($0.5 million) sold to
the US as exports were supplied by the plantation
in northern Mindanao. Natural resources exports
were not yet a big factor, but they showed up in
the export statistics. Timber and lumber exports
($3.1 million) accounted for 2.2 percent of total
exports.
 As a result, the standard of living was
relatively good. Exports income enabled the
purchase of a wide range of imports. The
strong peso made possible the consumption
of items from the US and cheaper necessities
from other countries.
Economic development
Quezon’s solution to the foreign domination of the
Philippine economy was to call for economic
nationalism. An Anti- Dummy Law was passed in
May 1939 which punished Filipinos who allowed
themselves to be used as “dummies” or fronts by alien
businessmen and investors.
Credit facilities through the National Credit
Corporation encouraged Filipinos to engage in retail
trade.
Strengthen the basic framework of Philippine
Agriculture, Industry and Infrastructural
facilities
 On the agricultural field, he fixed many
loopholes in the Rice Share Tenancy Act of
1933, allowing the redistribution of
agricultural land to tenant farmers. There is a
Diversification and increase in agricultural
production.
 In response to social imbalance and land
maldistribution; National Economic Council
as an adviser and Social Justice Program that
bought lands and distribute it to farmers and
landless Filipinos. Law also requires a
written agreement between farmers, tenants
and landlords to protect citizens from an
unfair rent increase. Court of Industrial
Relations was established for the creation of
Agricultural and Industrial Bank, National
Land Settlement Administration and
National Housing Commission to provide
housing, National Relief Administration for
calamities and for finding employment to the
unemployed
Encourage measures aimed at self-sufficiency in
the domestic economy
 In 1938, the Key to Economic Nationalism,
or KENA concept, was launched aimed to
promoting Filipino participation in domestic
trade and commerce and Filipinos were
Econ Dev | Group2 (Cabradilla, Jacinto, Mangansat, and Pagaduan)
urged to patronize home- made products and
protect Filipino distributors and retailers.
 An important thrust in the direction was the
establishment of basic industries (such as
those of textiles and the preservation of food-
products) not only to provide employment
but also to bring the country closer to
economic sufficiency.
 The National Economic Protectionism
Association developed Filipino preference
for products grown or produced in the
Philippines, thus making them less
dependent on American goods.
Quezon urged the first National Assembly to
create a National Economic Council
 In March 1936, the National Economic
Council was created to direct the economic
activities of the Commonwealth.
 His effort to fix the economy can be seen on
the Commonwealth Act No. 2 which
established the National Economic
Council, this act helps solve social
imbalance, land maldistribution, provide
land to the landless and farmers, provide
housing and create an employment to the
unemployed. The members were instructed
not to believe in the economic philosophy of
laissez-faire but to favor government
leadership in production activities in the
planning of the national economy
 As Commonwealth president, Quezon
perfected a patronage system he had used as
Senate President (1916- 1935) to establish
his dominance over Philippine politics.
 The Philippine Commonwealth was a
“Quezon Government”, with him clearly
dominating political life and the National
Assembly almost totally submissive to his
domination. He was clearly the most
dynamic personality of the pre-war era and
exemplified the “modern lawyer- politician”
Summary
 Quezon stressed that one of the aims of his
administration was to grant Filipinos every
facility that they needed to acquire an
increasing share in business and economic
activities.
 He also assured to promote economic
development, in particular, the establishment
of basic and other industries not only to
provide employment but also to bring the
country closer to economic sufficiency.
 Quezon hoped that his attempts toward
economic development would pave the way
toward seeking an early independence from
the United States. Economic viability was
crucial to the quest for independence from
American rule.