FOR more than twenty years strong arguments have been advanced in favor of planting rubber in the Philippines. Yet of more than 4,000,000 acres of rubber planted during that time, less than 3,000 acres can be credited to the Philippines. Americans, after investigating the Philippines but finding the conditions not sufficiently attractive, invested over $30,000,000 in this period in rubber plantations in Malaya and Sumatra and now own there nearly 100,000 acres of planted rubber.

The United States consumes 70 percent of the total production of crude rubber. Due to restriction on exports from the British colonies for the past three years, world consumption has exceeded production by 150,000 tons. With full production from the British colonies from now on, the total planted area in the Middle East is estimated to be capable of supplying the full normal physical requirements for the years 1926, 1927 and 1928. From 1929 on, statistics indicate that consumption will outrun production. It takes five years to bring rubber trees into bearing and at least eight years for full production. By 1933, it is estimated that the world could use 150,000 tons more rubber than will be produced.

The prospective investor naturally will seek regions where climatic and soil conditions are favorable, where costs are likely to be sufficiently low to allow successful competition with present planted areas, where capital will be protected, where economic and political conditions will be stable, and where land tenure regulations will allow possession of areas sufficiently large to meet his needs and for a period long enough to make his investment a good one. Other things being equal, the American investor would prefer territory controlled by his own government.

The only two regions under American control that include areas with climatic conditions favorable to the production of Para rubber are the Canal Zone of Panama and the Philippine Islands. The present regulations concerning the use of lands in the Canal Zone would have to be radically changed before planting could be started and the areas are so small that the highest possible yield would fall short of 10,000 tons annually.

A recent impartial investigation into conditions in the Philippines leaves little doubt that climatic and soil conditions in the southern part of the islands offer as favorable opportunities for the growth of rubber as the best regions in other parts of the Middle East. There are at least 1,500,000 acres of good lands suitable for rubber planting in Mindanao and neighboring smaller islands, capable of producing fully 200,000 tons of rubber, which would be sufficient to meet the world's deficiency in planted area.

After rubber trees are in bearing, one laborer to every five acres is required, on an average, mainly in tapping operations. The Philippines have a population of about 12,000,000. Some provinces are very densely inhabited and if laborers could be induced to migrate to other parts, the islands as a whole would be better off. After a careful calculation, it is believed that in time upwards of 85,000 laborers might be recruited for work in the less settled parts of Mindanao, where there is an admitted scarcity of labor for such large development operations as are proposed. Together with 15,000 local laborers estimated to be available, this would give a force of 100,000 laborers capable of caring for 500,000 acres of rubber.

Certain prospective investors maintain that the difficulties of getting Philippine labor to migrate would make it impossible to plant a large acreage quickly unless they can draw on outside sources. If they are correct, this would mean the admission of labor from China, under well-defined restrictions. With preliminary operations completed, the Chinese laborers could be gradually replaced by Filipinos. Under the Jones Act the Philippine Legislature may, subject to the approval of the President of the United States, allow the importation of Asiatic labor; and Congress also has authority to change this organic law governing the Philippines.

A wage scale of about fifty cents for Filipinos and forty cents for Moros probably could be maintained in the regions where it is proposed to plant rubber, provided that development proceeded slowly. The wage scale on the present rubber plantations of the Malaya, Sumatra and other districts of the Middle East is twenty to twenty-five cents plus an additional fifteen cents for sanitary measures, recruiting, etc., that must be taken into account. This applies to all except Chinese laborers who generally work by contract and receive the equivalent of thirty-five to forty or more cents a day.

The difference between the wage scale of the Middle East and the Philippines means either that Filipino labor will have to receive a higher proportion of the cost of production or that other things being equal, total costs will be higher. But certain economies in costs not practiced at present in the Middle East are believed to be possible and would bring the cost of production in the Philippines down to levels equivalent to those in other parts of the East. Moreover, profiting by the experience of the East, it is believed that capital costs of planting and bringing rubber into bearing in the Philippines can be brought as low as elsewhere in the East.

The present land laws in the Philippines allow a corporation to lease or purchase 2,530 acres of land. The law might be interpreted to allow the lease and purchase of two lots of 2,530 acres, making a total of 5,060 acres. An individual is allowed to lease but not to purchase 2,530 acres. The leases are made for twenty-five years, with provision for renewal for two additional twenty-five-year periods. The limitation in the amount of acreage that can be acquired has been one of the chief obstacles in the way of large investments. The Philippine Legislature has the power to make grants of lands with more favorable terms, subject to the approval of the President of the United States; and again, Congress has power to change the organic act in such a way as to allow the leasing or sale of larger areas.

The uncertainty of the future political status of the Philippine Islands discourages capital investments in any large project. Undoubtedly, definite assurance that the sovereignty of the United States would be continued, with laws giving the Governor-General more power, would be the most satisfactory solution as far as the American investor is concerned. Independence, with treaty arrangements similar to those that exist between Cuba and the United States whereby American interests are protected and the maintenance of internal peace is assured, might be acceptable but would not be so satisfactory.

The Filipino ruling classes are asking full independence for the islands. They profess to be opposed to large-scale capital investment in plantation projects fearing that such influences, once established, will prevent the granting of independence. They have advocated openly that lands in the Philippines should be reserved for small holdings. Attempts to colonize idle lands in Mindanao with Filipinos, by government aid, up to the present time have not proved successful.

A number of proposals to liberalize the present land laws of the Philippines in order to encourage capital investments in rubber plantations have been discussed. Some of these have been introduced as bills for enactment by the Philippine Legislature, but so far no action has been taken.

If some definite assurance of continued American sovereignty could be given and the changes suggested in land and immigration laws could be made, it is believed that the conditions for profitable investment in rubber plantations in the Philippines would be at least as good as those in the regions where the bulk of the world's rubber is produced today. It is too much to expect, however, that either the Philippine Legislature or Congress will adopt these extreme measures. But there seem to be indications that one of the two legislative bodies might take action to relieve the situation to some extent. The investor seeks a reasonable guarantee that his capital will be safe and profits assured. It seems unlikely that large amounts of capital will be risked in the Philippines merely because it is under the American flag.

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  • HARRY N. WHITFORD, Manager of the Crude Rubber Division of the Rubber Association of America; former Chief of the Crude Rubber Section of the Department of Commerce
  • More By Harry N. Whitford