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An analysis of cooperatives as a solution to the basic social and economic problems of the Philippines

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An analysis of cooperatives as a solution to the basic social and economic problems of the Philippines

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Content AN ANALYSIS OF COOPERATIVES AS A SOLUTION TO t > THE BASIC SOCIAL AND ECONOMIC PROBLEMS OF THE PHILIPPINES A Thesis Presented to the Faculty of the School of Commerce The University of Southern California In Partial Fulfillment of the Requirements for the Degree Master of Business Administration by Alfonso Avis Altiveros » V * June 1957 UMI Number: EP43454 Ail rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. UMT '■ '^ ’’’ Dissertation Publishing- ^ " UMI EP43454 Published by ProQuest LLC (2014). Copyright in the Dissertation held by the Author. Microform Edition © ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code ProQuest ProQuest LLC. 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 4 8 1 0 6 -1 3 4 6 , M B fa This thesis, written by ALFONSO AVIS ALTIVEROS under the guidance of the Faculty Committee, and approved by all its members, has been presented to and accepted by the Faculty of the School of Commerce in partial fulfill ment of the requirements for the degree of MASTER OF BUSINESS ADMINISTRATION Date Approved - $ 4 I I TABLE OF CONTENTS j . i CHAPTER PAGE j I. INTRODUCTION............................ 1 The Problem • • • • • • • ............ 1 t i Statement of the problem • •••..••• 1 Purposes............... • • • • . 2' t Importance of the Study.............. 2 I Methodology. 3i II. COOPERATION IN ITS EARLY STAGES IN THE PHILIPPINES............... 5 Cooperation Among the Early Inhabitants • • 5 ; The Aetas or Negritos. . . .......... 5 The Igorots. the Bontoks and the Ifugaos . 7 The Subanons ............... 8 The Malays ...••••• .............. 9 Evolution of Early Cooperative Practices • • 10 The Turnuhan.......................... . 11 Service turnuhan.................... . 11 Money, religious, and social turnuhans . 11 Turnuhan by reason of circumstances. • • 1^- Hangosav. Hanosav. or Hanavnav ...... 16 Bangahan. Anreoan. Tabang. Ambag or Limos. 16 Gamal. Gimong. Tagnawa. Tupac, and Reddec. 17 Summary •••••. ...................... 17 iii CHAPTER PAGE i III. THE PROBLEM OP THE SMALL FARMER........... . . 20 j Background • •••••••.••••••••• 21 Nature of the Landholdings • 22 Farm Per Capita Income • ••••••••••. 2b Farm Employment. ••••••••• .......... 25 Credit Facilities. ............. 28 Lack of an Orderly Marketing System.......... 29 IV. A HISTORICAL REVIEW OF THE DEVELOPMENT OF THE COOPERATIVE MOVEMENT IN THE PHILIPPINES. ... 33 The Agricultural Credit Cooperative ......... 33 1907— Launching of the cooperative movement. 33 1908—-First agricultural hank.............. 3b 1915— The Rural Credit Law............... 35 1916— The Philippine National Bank ........ 35 1919—* The Rice and Corn Fund ........ 36 192^-The Guanco Act............... 36 1930— Acts 3895 and 3896............. 37 I936— The Agricultural Cooperative Fund. • • 38 1939— First twenty years of the Rural Credit Law*s operation. ............ 38 1939— The Agricultural and Industrial Bank • 39 1939--The Commodity Corporations .......... 39 19^-0— The National Trading Corporation and the Agricultural Cooperative Fund........ *+0 iv CHAPTER PAGE 19*+0~The Cooperative Law......... • . . . *+0 | 19^1— The National Cooperatives • •••.. bl ! X9^5— Post War ........................ *+1 19if7— The Rehabilitation Finance Corporation............... b-2 19if7— The Agricultural Credit and Cooperative Financing Administration • •••••••• * + - 3 The Cooperative Marketing Associations .... kb 192*f~-The Tobacco Industrial Committee • . * k$ 1927— The Cooperative Marketing Law........ H- 6 The Cooperative Administration Office. ... ^7 The Consumers* Cooperative Associations. ... ^9 1916— Forerunners of Consumers* Cooperatives 50 1938— The Consumers* Cooperative League of the Philippines...................... 51 War years. . . . . . . . . . . . . . . . . . 53 World War I I ................. ?k Post War ......... 55 The Cooperatives Administration Office ... 55 The UNIFIRCA— United Filipino Retailers* and Cooperative Association.............. 57 The Retail Trade Nationalization Law .... 58 The Filipino Retailers* Fund.............. 60 V CHAPTER PAGE The National Marketing Corporation • . . • 61 The Credit Unions* • .•••••••••*• 6*f Summary. .................... 65 V. COOPERATIVES IN THE RURAL RECONSTRUCTION PROGRAM OP THE PRESENT GOVERNMENT.......... 69 The Agricultural Crddit and Cooperative Financing Administration................ 69 The Organizational Structure of the ACCFA. 69 The Board of Governors............. • • 70 The administrator, staff, and personnel* 71 Recruitment of staff and personnel . • • 73 General Powers • * • • • • . •.......... 71 * - Special Powers........... 75 Loaning Activities and Purposes ........ 76 Sourees of Funds . . . * ............. 77 The revolving fund............. . . . 77 Other sources, *.•..*.« ........ 77 Other provisions * ............. 78 Penal Provisions .•••*••**•.•• 79 The Objectives of the Agricultural Credit and Cooperative Financing Administration • 81 First Objective* .................... 82 Loans to small farmers through the ACCFA 82 Vi CHAPTER PAGE Types and Purposes of Loans* • • . • • 83 Crop or production loans ....... 83 v Farm improvement loans • 83 Commodity loans................ 83 Terms of Loans • •••••••••••• 8^ Security Against Defaults............. 8*f The administration of loans.......... 85 The processing of loans. ........ 85 The loan schedule and farm budget. ... 8? Collection ................ ...... 88 The rural bank loans................. 89 Purposes of rural bank loans •••••• 91 Purposes of loans to small farmers ... 92 Types and terms of rural bank loans to small farmers • •••••••••• 93 Palay and corn loans................ 93 Perishable erops.................... 91 * Livestock and fish ••••••••.. 9*+ Other agricultural products.......... 9*+ Interest Rates......................... 95 Second Objective.......... . . . 95 The Farmers* Cooperative Marketing ... 96 Who May Organize.................... 96 vii | CHAPTER PAGE Voting power of members ............ 98 Patronage dividends............. 98 Functional structure of a FaCoMa • • • . 99 The Board of Directors ...••••• 99 The Manager and the personnel........ 99 Members* Committees. • • ............ 100 Operation of the FaCoMa s .............. 101 Organization of FaCoMas........... • • 101 Economic survey. ..••••••••• 101 Education................... 101 1 Election of provisional committee. • . 102 Election of officers • » • • ....... 102 Registration and affiliation ..... 102 Capitalization of FaCoMas. . ........ 102 Cooperative budgeting......... 103 Share in Interest on loans ...... 103 Forces stock subscriptions . ....... 103 Regular fund sources......... 10*+ Other sources........................ 10*f Federation of FaCoMas............. 10*f Third Objective • ........ ....... 10V Loans to Cooperatives................. 105 Facility loans...................... 105 viii CHAPTER PAGE Limitations on Facility loans........ 106 Interest on loans to cooperatives, • • 107 Rural Banlc Loans to Cooperatives .... 107 The Five-Year Development Program of the Agricultural Credit and Cooperative Financing Administration for Cooperatives and Credit Financing........... 108 Credit Financing...................... 108 The Loaning Program ......... ...... 109 The Primary Group.................... 109 The Secondary Group .............. 110 The Warehousing Program 110 Sources of Funds for the program. .... Ill The revolving fund................... Ill Other provisions. .............. Ill Comparative Reports on ACCFA*s Progress • 111 Initial operation ••.•...•••• Ill Second year ......... 112 Third year........................... 113 Summary .•••••••••••••••• ll*t VI. OTHER MEASURES UNDERTAKEN BY THE GOVERNMENT . . 116 Combating the Tenancy Problem ••••••••. 117 Historical background ..... .......... 117 ix CHAPTER PAGE The Agricultural Tenancy Act ........• 118 Advantages of the Tenancy Act • •••••• 118 ; The Agricultural Tenancy Commission. .... 121 t Land for the Landless.........................122 i The National Resettlement and Rehabilitation Administration— Its Functions. ...... 122 i Qualifications for Settlers 123 ' Government incentives to encourage progress in the Settlement areas ..... 12b 1 i Government Agencies Cooperating with NARRA . 125 j Bureau of Agricultural Extension ..•••• 126 The b-E Clubs . . . .....................127 The Rural Improvement Clubs................128 t The Barrio Council ................129 The Philippine Council for United States Aid and the Foreign Operation Administration Joint-Aid Program. ..••...•••.•• 130 PIHLCUSA Projects. . . . . . 131 Brief appraisal.......... 132 Development of Home Industries .......... 13*+ Philippine Home Industries 135 Handweaving in Malabonip Rizal. ...... 135 Duck Raising .•••••••• .......... 135 .. J X ‘ CHAPTER PAGE i | Buntal Fibers Extraction Industry............136 ! ! Buntal Hat Weavers . . .......... . 136 j ' ! Others ... .............. ....... 137 ! \ i ; Other Incentives • •.•••••••...• 137 ; | Summary. ........ ........ ...... 137 VII. SUMMARY AND CONCLUSIONS.................. l*fl ; j i Summary. ........ . . l*+2 Conclusions.........• •• •• .......... l*+8 i BIBLIOGRAPHY............. .......... .............. 151 i ! APPENDIX A. Number of Cooperatives (FaCoMas) j Organized and Affiliated with the ACCFA Fiscal Years 1953-5*+-55................. 16^ APPENDIX B. Total Amount of Lanns Made to Cooperatives and Members, Organized, and Affiliated with ACCFA— Fiscal Years 1953-5^-55 . . . 165 APPENDIX C. Total Membership of all Cooperatives Organized and Affiliated with ACCFA— Fiscal Years 1953-5l +-55* • • ............166 CHAPTER I INTRODUCTION In spite of the many efforts in the past to raise the standards of living in the rural areas of the Philip pines, deplorable conditions still exist. These conditions borne by thousands of small farmers and agricultural workers are malignant diseases in the body of the whole Philippine nation, causing serious damage to her social and economic health. I. THE PROBLEM Statement of the problem. The late Honorable Manuel L. Quezon, first President of the Commonwealth of the Philippines, when the country was still a protectorate of the United States of America, described some of the problems of his country when he said of his people: The poor still has to drink the same polluted water that his ancestors drank for ages. Malaria, dysentery,j and tuberculosis still threaten him and his family at I every turn. His children can not all go to school, or if they do, they can not even finish the whole primary instruction, for one reason or another. Roads from his barrio or his little farm to the town there are none. Only trails are within his reach— trails that have been formed by the daily pressures of his bare feet and not because they have been constructed. As he works from sunrise to sundown, his employer gets richer while he remains poor. He is the easy prey of the heartless usurer because usury is still rampant everywhere despite legislative enactments intended to suppress it.l •^David Bernstein, The Philippine Story (New York: Farrar, Straus, and Company, 19^7)/ P« 22._____________ This statement is a word-picture of the problems of l the rural areas. If the Philippines are economically weak and poor, it is because her people in the rural areas and communities, who comprise the greater bulk of the popula- I jtion, are economically weak and poor. If the Philippines are underdeveloped, it is because her rural areas are underdeveloped• The problems of the rural inhabitants, therefore, are the basic social and economic problems of the entire nation. Unless these are solved and remedied, the progress of the Philippines as a whole will be greatly retarded. II. PURPOSES The purposes of this study were, first, to show how the rural development in the Philippines was undertaken through cooperatives; second, to determine the effective ness of cooperatives in effecting improvement in the rural community life of the people; third, to appraise supple mentary aids undertaken by the government; and lastly, to examine the prospects for future success in the use of cooperatives as a workable solution to the (rural) social and economic problems of the country. III. IMPORTANCE OF THE STUDY It has been mentioned that unless the problems of the small farmers and agricultural workers are solved, the (progress of the country as a whole will he greatly retarded. This is sufficient reason for undertaking this study, hut the writer believes that ideological implications also The threat of Communism in the Philippines is a living reality today. Obviously, it is not difficult to lure a country to toy with an ideology which offers a promise of even a slight improvement in living conditions when her people are barely existing. So low are their incomes that they cannot even afford the bare necessities of life. A people under such a condition is ripe for a change— even a change which may be dangerous to their real welfare. Accordingly, rural reconstruction has considerable ideological, as well as social and economic significance. Various methods were used in gathering information, ideas, and materials for this study. Some of the research were done by means of interviews with! (1) government officials, among them Dr. Pablo N. Mabbun, foremost author ity on cooperatives in the Philippines and recently Economist for the Rehabilitation Finance Corporation; (2) officials and employees of the Bureau of Commerce and Industry, Philippines; (3) officials and employees of the National Marketing Corporation, with main offices in Manila; Of) officials and employees of the Central Bank of the merit consideration. IV. METHODOLOGY I f Philippines; (5) professors and instructors in the University of the East, Philippines, who have made related studies on the subject matter; and (6) Filipino leaders and congressmen who were willing to discuss with the writer and make available their bills relating to cooperatives. The balance of the research was done through the reading of pertinent books, agricultural and periodical magazines, local newspapers, articles and pamphlets avail able in libraries of Manila, University of the East, Los Angeles Public Library, University of Southern California, and Bureau of Commerce and Industry, Philippines. Reports and other printed materials from the Cooperatives Adminis tration Office, the Agricultural Credit and Cooperative Financing Administration, and unpublished speeches of Filipino leaders on the subject matter were also studied. In addition, the writer drew upon his own familiarity with and observations of the rural areas of the Philippines in the preparation for and of this study. CHAPTER II COOPERATION IN ITS EARLY STAGES IN THE PHILIPPINES The ethnological background of the Philippines has contributed much to the development of cooperatives in that! country. Many years ago, peoples of different origins and | < races migrated to various parts of the Archipelago. The spirit of cooperation ingrained in the ways of life of these early inhabitants is a valuable heritage to the i present-day Filipinos. It is believed that this heritage j can be used as a foundation for formally organized cooperatives, to meet the needs of the country in her i rural communities. I. COOPERATION AMONG THE EARLY INHABITANTS Centuries before the Spanish colonizers first set foot on Philippine soil, the Islands were already inhabited by various ethnic groups. The way these peoples lived together was a crude pattern for the present-day systems of cooperation. The Aetas or Negritos. First to migrate into the Philippines were the Aetas.^ They came by land. The Spaniards, when they arrived, called them Negritos because ~ * ~ The Philippines. A Handbook of Information (Manila: Philippine Information Agency, Office of the President of the Philippines, n.d.), pp. 3-*+«___________________________ i 6 they were small in stature (the average height of the men heing about *+.^7 feet), with dark brown skins and woolly- j kinky hair.** j Negritos were known to be the oldest inhabitants, ! i I They did not build houses; they roamed in the mountains andj ) |had no fixed sites for dwelling. "Theirs was a life of continuous search for food," as described by Miller, since food was their chief aim in life. Aside from the bow and arrow, domesticated dogs and their women helped in scaring the quarry towards their direction during the hunt. When a deer or a boar was killed, a definite division of the carcass was made. To the man who first wounded the animal went the head and the breast; the backbone went to the man who dis charged the fatal shaft; a hind quarter was given to the owner of the dogs, and the, remainder was divided among the rest of the hunters.4 - Hunting was a group endeavor. After each successful hunt, the hunters burned the animal in a hole which they scooped at the spot where it fell. They, then, devoured their shares until they could eat no more. After this, they went to sleep. When they awoke, eating was continued if there were some "leftovers." Otherwise, the hunt was on again. 2 David P. Barrows, History of the Philippines (Chicago: World Book Company, 192577 P* 6. 3 Hugo H. Miller, Economic Conditions in the Philip pines (Boston: Ginn and Company, 1913), P*2. ‘ ‘ ’ Ibid.. p. 3. The Ieorots. the Bontoks. and the Ifueaos. Among j the early inhabitants were the Ieorots. the Bontoks, and the Ifueaos. all primarily mountaineers.^ These tribes migrated to the Northern part of Luzon, one of the three j Imajor islands of the Philippines. They preferred to live I |in the high, cold, and semi-arid placesj thus, their place I of habitation offered them very little fertile and arable j i land. Rainfall was the only natural source of water supply for irrigation purposes. These tribes were dependent for their food supply on the man-made rice terraces built on the mountain sides. The terraces were dependent on rainfall for moisture. Survival required the cooperation of every member of the group in making fertile and arable areas out of wastelands. For irrigation purposes, other than just depending on rainfall, these tribes devised a system of channeling the water from nearby rivers and springs to the terraces and from plot to plot, through the use of log flumes and ditches. The work of building the system was communal. The water, therefore, was divided among those who helped provide it. Cooperation in the villages involved all— the young, the strong, and the weak. The men did the cutting of the wood and the lumber, built the houses and the dikes, ^Ibid.. p. 9. !constructed the irrigation dams, and transported the harvest from the fields to the village. The women and the children did the pulling of the weeds and helped in the preparation of the seeds, as well as in the planting and j in the harvesting. The old were the counselors, who also ihelped in guarding the crops, in caring for the children and other minor chores in the home. For protective measures, their village system of life was most advantageous. It is believed that such group living was brought about by the need for common protection of all. The Subanons. Far to the South in the Zamboanga Peninsula, migrated the Subanons.^ They were an agricul tural people. They were also partly dependent for their food on hunting. They worked in groups by families in the clearing of their lands, using a system called the kainein. This was done by setting fire to the site which the group had chosen to clear. In cultivating the clearing, the men made the holes with sharp sticks. The women and the children followed, planting the seeds. The whole group partook of the harvest. Food procurement was essentially a cooperative endeavor among these people. 6Ibid.. p. 5. 9 The Malays. Last of the ethnic groups to migrate to the Philippines were the Malays, From Southeast Asis, they came by sea. They brought with them their own culture, jwhieh was probably influenced to a degree by their cultural jand commercial contacts with India, China, and Arabia. The j l j Malays occupied the low lands and the coasts of nearly all j i parts of the Islands. They drove into the interior the earlier settlers and the aboriginal Negritos. Although of Ionly one stock, the Malays differed considerably, Including the use of different dialects. The Malays were the ancestors of the present-day 7 Filipino people. They were the first to be Christianized and ruled by the Cross (and by the sword) borne by the Spaniards when they first came to the Islands in the year 1521. The Spaniards found the Malays had a government of their own called the barangav. A barangav consisted of from thirty to one hundred families living together in 8 closely-knit clusters of houses. Work within the barangav was communal. Cooperative group endeavor was their way of life. The barangavs also had agreements among themselves to cooperate with one another for their common welfare and protection.^ ?The Philippines, loc. cit. Q Barrows, op. cit.. pp. 78-80. 9 _______ xThe Philippines, o p . cit., p. 11._____ , 10 The head of a barangav was called a Dato or chief. He took responsibility over the affairs of his barangav. Communal land tenure was the practice. Each family was ! given a portion of land to till. The title of ownership j ■ i |to the land remained under the name of the Dato. \ I 1 0 ! Community feeling was very strong within a barangav. For instance, a man might not transfer to another barangav without the consent of the barangav to which he belonged. 'Also, the marriage of two people coming from two different i 9 barangavs required the consent of their respective baranaavs.1 The children of this marriage were divided between the two | barangavs. If one barangav member suffered an injury from an outsider, the whole barangav had to be appeased. Such was the feeling of oneness and unity within a barangav which made cooperative group undertakings come naturally and spontaneously. It was a family affair based upon blood kinship. II. EVOLUTION OF EARLY COOPERATIVE PRACTICES In the major regions of the Philippines, various cooperative practices in their original forms are still in existence. Some have been modified due to the changes that took place in the economic and social conditions of the country and people. Some of these practices are described below. _______10Barrows. loc. cit._____________________________ Turrmhan In the Tagalog regions, there is a system of coopera tion which is popularly known by the name of turnuhan. i - j jwhich means, by turns. The turnuhan may be organised for various kinds of undertakings and occasions, but the condi tions under which it generally operates are of three kinds: Service turnuhan. In a service turnuhan. the beneficiary of the group work is the community itself. The people in the community perform in rotation, by groups, the services needed for the common benefit. A good example of a turnuhan of this sort is the 12 ronda. In a ronda. only the men-folk participate actively. The practice is for the men to patrol the entirei neighborhood to protect the community from fire, robbers, and other possible hazards. The women, in some cases, contribute to the undertaking by preparing eatables for the men on duty. They do this also by turnuhan. The money. religious, and social turnuhans. The second type of turnuhan is one in which the beneficiary is chosen by turns from among the participating members. Here, a group project may take the form of money, religious, and social turnuhans. 11 Miller, oja. cit.. p. 219. 12Ibid.. p. 222. r 12 i | To the money turnuhan. a common practice in Tayabas I land Laguna, a new feature has been added. While the old Jform was completely devoid of formalities, the modified | TO form now has by-laws to bind the members, ^ Every member J |is required to contribute to the association a fixed sum at i iregular intervals. Failure to follow the regulations of i the association is punishable by fine. The entire sum collected from the group is given to one of the members chosen by lot after a specified period of time when the drawing takes place. The turnuhan continues until each member of the group had been tapped by luck. In Manila and in the neighboring towns and provinces,1 the month of May is the time for the religious turnuhans. This practice was established by customs and traditions. An example of this undertaking Is called the Santa Cruz de Mavo. or the Holy Cross of May. In the Tagalog and Visayan provinces, religious turnuhans known as the Barangav sa Birhen are part of the customs and tranditions of the people. This turnuhan is a a group prayer u ndertaken by turns by various groups In honor of the Blessed Virgin Mary. Both the Santa Cruz de Mayo and the Barangay sa Birhen are undertaken by various groups who take turns in supervising the affair. Both are 13 Ibid.. p. 223. 13 religious in nature and in the shifting of responsibilities i among the participating groups, a procession is organized, j in which all participate. I ! All over the Philippines, group labor turnuhans are j |undertaken in various tasks usually connected with field t work. In a group labor turnuhan. there is an understanding that the beneficiary shall work in a like manner for each member of the group, although no expressed agreement exists, |A short description of this form of turnuhan. called the bavani or the palusone. as witnessed by George A. Malcolm j during a harvesting season, gives the reader a colorful j 'picture of how this is done? ; Planting season is very well celebrated in the Philippines, as corn husking is in the United States. Often, it is made a community affair. The farmer sup plies the eatables and his friends supply the man and woman power. Both sexes work side by side in the fields. To the accompaniment of guitars and harmonicas and with songs and laughter, the seedlings are made ready, the land is harrowed, and the rows of palay are planted. It is a golden opportunity for love-making, and needless to say, youthful swains and their adored make the most of it.11 * Since agriculture takes only 130 days of actual labor in the fields, some people in the communities and villages make use of the off-seasons to supplement their incomes by engaging in other forms of group labor turnuhans. Ik George A. Malcolm, The First Malayan Republic (Boston: The Christopher Publishing House, 1951)* P* 3^5. ' ■ ~ ~ " " l f j In Baliwag, Bulakan, group labor turnuhan is directed towards the production of high-quality hats. The materials are supplied by members of the community. In other cases, one member may provide the materials and at the same time, make the necessary negotiations for the sale of the finished hats. In any case, all benefit equally, Santa Maria, another municipality of Bulakan, with a total population of twenty-three thousand, attributes her development towards the mutual cooperation among her inhab- ♦ jitants. Group labor turnuhans in poultry raising, embroidery, and clothes-making made this municipality prosperous. Turnuhan by reason of circumstances. Last of the conditions under which a turnuhan takes place is where one member becomes a beneficiary by “reason of circumstances." Occasions which give rise to this form of turnuhan may be a wedding, a baptism, or a death of a member of a family in a community. In the case of a wedding, the close friends and relatives of the newlyweds give ambae or contribution to them and their families. The ambag may be in the form of money, goods, or services, voluntarily given. In some 15 Alfonso Halili, “The Santa Maria Story," The Phi- lippine Yearbook of domraa-i-ca and Industry (Manilas National Printing Company, Inc., 1955)> p. 98. parts of the country, the newlyweds dance for hours after t the wedding ceremony, encircled by their guests who take turns in pinning paper money on the couple1s wedding attire. All these contributions and gifts are intended to help the newlyweds get a good start financially. Also, much of the expense incurred in the wedding celebrations is absorbed by the guests present during the occasion, through these voluntary contributions. i In the case of a baptism, the ambae also consists of i money, goods or services for the purpose of helping the beneficiary pay the expenses incurred for the occasion. Funerals are objects of turnuhans. The practice is j to sympathize with the family of the deceased and giving an abuloy is part of it. An abuloy is a form of contribution. It may be in the form of money to help finance the burial and funeral services. Some people give food because it is the custom to serve mourners and sympathizers with some native refreshments. Others give their services in the making of the coffin or in making arrangements for funeral procedures. There is no fixed form of ambae or abulov. They represent voluntary contributions which the donor can afford to give or is capable of doing for the benefit of the beneficiary. 16 Hangosav. Hanosay. or Hanavnay In the Bohol areas, cooperative practices are known 16 ■under the names of Hangosav. Hanosav. or Hanavnay. These undertakings are temporary in character. They exist only for as long as the need for them is present. As described by Balmaceda: The cooperative systems existing in the provinces of Bohol may be divided into three general classes. First are the cooperative labor associations, formed for the purpose of working together in the planting, cultivating, and harvesting of the various kinds of crops; weaving the mats, sinamay. saguran, and other kinds of clothes; knotting of abaca, Pina, and raffi fibers; building and repairing of houses. Of the second general classification are the cooper-j ative financial or revenue associations. In this case, money or products with commercial value are contributed instead of labor. The members consider this system as | some sort of a savings bank. A member contributes on { the installment plan, and after each period, he receives in a single sum the total amount of his contributions• In the third classification are the charitable associations.17 Bangahan. Anreoan. Tabang. Ambag. or Limos In the Blcol regions, cooperative practices are known under the names of Bangahan. Anreoan. Tabang. Ambag. ^Leopoldo Teodosio Ruiz, "Development and Solution Certain Socio-Economic Problems of the Philippines with Special Reference to the Present Cooperative Movement" (unpublished Doctor*s dissertation, University of Southern California, Los Angeles, February, 19^2); citing S. R. Men- dinueto, "The Cooperative Movement in the Philippines" (mimeographed bulletin from the Bureau of Commerce, Manila, n.d.), p. 5. x7lbid.. pp. 2-3. S. R. Mendinueto citing Julian C. Balmaceda.________________________________________________ 17 or Limos. These group undertakings are limited in partici pation to the very close members of the family* As to their character, they are similar to the turnuhan of the | Tagalog regions in many respects and to the Hangosav of the! Bohol region* Gamal. Gimong. Tagnawa. Tupac, and Reddec The cooperative practices in the Iloeano provinces carry the names of Gamal. Glmong. Tagnawa * Tupac, and Reddec * Although agreements are unwritten, the participants in a gamal. for instance, are bound by tradition and cus- l8 tom. Under the system, one may start a gamal if he needs! help in the building of his house, or in the clearing of his fields, or in any project which is too big for himself ] and members of his own family to undertake. In a gamal. the cooperators expect the initiator to provide them plenty of food and drink, while the work is in progress. A eooperator is expected to work for only one day, and he quits without obligation of any kind. Ill. SUMMARY Various other illustrations could be cited with respect to early cooperative practices. Although devoid of the formality of written laws, it is clear that ^Ibid.. citing: Primitivo C. Milan, "Gamal and Other Iloeano Cooperative Customs," The Cooperator. 1:*+, August, j 1939. i cooperation is not a new way of life for the Filipinos, Centuries before the Spanish colonizers first set foot on Philippine soil, the Islands were already inhabited by various peoples who lived together in cooperative fashion. Said Emery Reves, "Man in society is constantly seeking 19 security and freedom. This is a fundamental instinct.” The practices cited indicate that the Philippine peoples are no exception. It can, therefore, be concluded that,from the very beginning, when the Negritos first set forth to hunt for their next meal, when the mountain peoples— the Ifugaos. the Igorots. and the Bontoks— with determination and cour- i age, carved the steep mountains and hillsides to build terraces upon which their food supply depended and redi rected the flow of the rivers and streams to water these fields on the terraces, when the Malayan forbears of the present-day Filipinos lived within the walls of a barangav. the spirit of cooperation was the foundation upon which their economic, political, and social organization rested. Although these cultural patterns have been instru mental in preserving the unity of the Filipino people, still they lacked the strength needed to fully unify a nation. The barangav was weak in that it did not include the whole tribe or nation. 19 Emery Reves, The Anatomy of Peace (New York and London: Harper and Brothers Publishers. 19*+5)» P. 109» _____ However, the spirit of cooperation engrained in the past history of the country, may well be harnessed to provide a foundation upon which an organized cooperative system may be developed, with the end view of improving the rural community life of the country as a whole. CHAPTER III THE PROBLEM OP THE SMALL FARMER The problem of the common man in the Philippines, who is generally represented by the small farmer, is |directly related to the issues under consideration in this study* The elevation of his social and economic status is of prime consideration in the rural development program of the government because it is believed that the socio economic problems of the country can never be solved unless t the socio-economic problems of the small farmer are first solved. He is the central figure, and the condition he is in, therefore, would reflect the conditions existing in the country. The government hopes to attain the fulfillment of this program through the application and uses of an organized cooperative system. This need was clearly stressed as the foundation of the governmentcs development program. In an inaugural address on December 30, 1953» after his election, President Ramon Magsaysay of the Republic of the Philippines, set forth the guiding principles of his administration. He said: Democracy becomes meaningless if it fails to satisfy the primary needs of the common man, if it cannot give him freedom from fear and freedom from want. His happiness and security are the only foundations on which a strong republic can be built. His happiness and security shall be foremost among the goals on my administration.1 In order to get a full conception of these problems, it is necessary to focus attention on the problems of the small farmer. Background. In the Philippines, the common man is the rural laborer of the country. His kind is the largest in number. The farmer is considered to be the country*s primary producer of wealth, and has often been referred to as the "backbone” of the nation. He is a hard worker in the fields, a fact supported by the observation of George 2 A. Malcolm, an authority on Philippine history. But, unfortunately, the farmer lives in abject poverty and want. He lacks the ability to buy even the bare necessities for himself and for his family. The ever-increasing application of modern communications has magnified and multiplied his desires and needs, and caused him more frustrations. He has been subjected to oppression by his employers and preyed upon by usurers. Today, he appears resigned to this fate, but he can be easily stirred into violence. He is Advertisement, ”19l +6-1956, The Tenth Anniversary of Philippine Independence,” The New York Times. Section 10, July 8, 1956, p. 3. 2 George A. Malcolm, The Commonwealth of the Philip pines (New Yorks D. Appleton-Century Company, Incorporated, 1939)> P. 25. quick to respond, especially when offered hope for a change in the condition he has been forced by circumstances to accept. To mention a few occasions, the Colorum Uprising of 1932, the Sakdal Eevolt of 1935, and not too long ago, the Hukbulahap Bevolt, all represented dissatisfaction among the farmers. Predominantly agricultural, the common man accounts k for 39*7 per cent of the nationrs income. Seven out of every ten Filipinos earn their livelihood by tilling the soil..'* In direct contrast, a comparatively small set of non-productive traders, middlemen, and landlords live a life of ease and comfort. For purposes of this study, the following factors which caused this abnormality of conditions in the rural areas of the country may be briefly mentioned. Nature of the landholdings. Of the 1,638,000 farmers in the country, 775*000 rent all or part of the land that they farm.^ The average size of the farms is 3Alvin H. Scaff, The Philippine Answer to Communism (Stanford, California: Stanford University £ress, 1955). 1 4 - Source of basic data— Central Bank of the Philippines. ^Ibid. 6 Source of basic data— Bureau of Census and Statistics, Manila, Philippines. 23 3**+9 hectares^ (8.62 acres). The average area per farm for o the different types of farms In the country is as follows: Tvue of farm Hectares Acres Palay 3.09 7.63 Coconut **.63 11.56 Corn 2.16 6.33 Root Crops 2.13 5.15 Fruits 1.06 2.62 Abaca 8.36 20.65 Sugar Cane 9.9? 2b M Tobacco 3.0*+ 7.51 Vegetables 3.08 7.61 Poultry 2.21 5.*+6 Livestock 169.38 *+17.36 Others *+.68 11.56 Because of the small size of the farms, the e< mical application of modern techniques of producation can not be used to an advantage. The national average production of rice is less than thirty cavans (35696 pounds) per hectare (2.*+7 acres). In the majority of the rice farms, only one crop a year is planted due to lack of irrigation systems. According to the reports of the Foreign Operations Administration through the Philippine Council for United States Aid, the Philippines rank almost at the bottom in productivity among all rice-producing countries of the 9 world• Ibid. o Progress *5*+, "Per Capita Income of Farmers Still Low," Times-Mlrror Annual Report. 195*+» p. 101. 9Ibid.. p. 101. ' 2b\ \ The low yields of crops are attributed to the following causes:^ 1. The failure to employ Improved methods of produc tion, such as seed selection, proper control of pests and diseases, the use of fertilizers, proper irrigation systems and other modem tech niques of farming and production through the use of machineries. 2. The poor or improper management of the land and other resources of the farmer. 3. The physical conditions of the soil, climate, moisture, and topography. Farm per capita income. By common practice, the tenant farmer, in addition to his labor, also contributes to the cost of farm operations, in the proportion of 50-50 with the landlord.^ Crop sharing is generally 55-^5 in 12 favor of the tenant. But because of the low yields, the farmer*s means of livelihood is very limited. The average income of the farmer*s family is estimated at less than 700 pesos ($350.00) a year.1^ The average size of the farm household is more than five mem bers. The national average per capita income is estimated Ik at 3^1 pesos ($157*50) a year. Of the farmer*s meager ^Salvador Araneta, "Outlook for Agriculture,1 1 Tlmes-Mlrror Annual Report. 195*+, p. 99* 11 Second Annual Report. Agricultural Credit and Cooperative Financing Administration. 1953-195M-. Manila. 12Ibid. Ibid.} citing Generoso F. Rivera and Robert T. McMillan, "An Economic and Social Survey of Rural Households in Central Luzon," Manila, 195*+. llfIbid._______________ _ income, 50 to 70 per cent goes for food. His diet is made | up mainly of fish and cereals, and is harely sufficient to meet the normal requirements for healthful living. Farm employment. There are no regular employment ] !opportunities in the rural areas to absorb the increasing man power of the country and to provide other sources of income to the farmer whose work on the farm takes only 130 days in a year. The labor force is estimated to be icr increasing at 150,000 every year. ' This situation is causing serious problems of unemployment, low wages, and low living standards among the farm population. To protect the farm workers, a minimum Wage Law was 16 put into effect by the government. The Act specified that "every employer who operates a farm enterprise com prising more than 12 hectares (29*78 acres) shall pay to each of his workers engaged in agriculture wages at the rate of not less than 2 pesos and 50 centavos ($1.25) a day, and that no allowance for board and lodging shall reduce said wage specified below 2 pesos and 25 centavos ($1.13)." 1*5 'Ruben F. Santos, "Labor Problems," Times-Mirror Annual Report, Manila, 195**-j P« * * * * - • 16 Progress "Problems of Farm Wages," Times- Mirror Annual Report. 195*+* Manila, p. 102. 26 The minimum Wage Law is only partially effective because employers who operate a farm enterprise of less than 12 hectares (29.78 acres) are not covered by law, the average sLze of farms being only 3.^9 hectares (8.62 acres). Furthermore, the government agencies like the Wage Adminis tration Service, are undermanned, so that some provinces 17 are without the benefit of the services of wage inspectors. Although there was only an average of four disputes a year declared and registered in the agricultural labor and wage area, as compared to the number of industrial disputes in the country which reached a total of 577 in 1953, it is not safe to conclude that the farm workers are 18 contented with their lot. The great majority of the farms in the Philippines are still managed on a share system, between landlords and tenants. To a certain extent, feudalism is still retained. Moreover, farm workers are scattered over large areas. This situation deprives them of the opportunity to discuss their common problems, to consult with one another, and to organize themselves into collective bargaining units. Granted that they could meet from time to time, the prevalence of igno rance among farm people prevents them from expressing their 17Ibid. •*-®Ruben F. Santos, loc. eit. 27 needs. Discontent to a great degree, therefore, may he present among the farmers, although it may not he manifested through demonstration of strikes. The 19*+8 Census reported the population of the ] IPhilippines at 19,23*+,182. Out of these, 7>*+l5,776 persons 1 jor 38.6 per cent were either engaged or employed in various I 19 [industries in the following proportions: Primary Industries: Agriculture •••.••••••••••• *+,623,725 Fishing ................... 237,7^1 Hunting ........ 13.250 Total.......... *+, 87^,710 Secondary Industries: Mining and quarrying ...... 17,860 Manufacturing ••••••••••••• *+52,603 Construction ..... 133.*+11 Total ...... 602,78*+ Tertiary Industries: Public Utilities .... 13*+,863 Trade and Commerce ..... 3*+0*386 Government Service •••••••• 2*+6,8*+l Personnel Service ........ 378,770 Professions ....... 158,776 Others ........ 12.567 Total ............ r,"570'!S5S There was a preponderance of employment in agricul ture which accounted for 62.3 per cent of the working population as per the 19*+8 Census report. By 1953» the population of the Philippines had increased to 21,022,700, with a reported lahor force of 20 8.1 million. Of the 8.1 million, 6.9 million were 19Ibid.. p. *+*+. 20Annual Report of the National Employment Service Bureau. 1953-195*+. Manila, Philippines.________ reported to be actually engaged or employed in agriculture, industrial, and commercial activities* The balance of 1.2 ! million represented the unemployed portion of the labor force• i | Although there was no projection of the labor force I for 1955 at the time of this writing, it was estimated that on the basis of 8.1 million labor force, the portion of the 21 1 unemployed had increased to 1*5 million. 1 i ! With a labor force that is estimated to increase at 150,000 every year, the unemployment situation is apt to become more and more serious, and a great contributing factor to this is the farm labor situation, since agricul ture comprises the major part of the employment area. Credit facilities. The small farmer*s credit needs are small. Banks often refuse to cater to his needs. He finds it hard to secure credit on tolerable terms. Where credit is available, it has been usually offered at exorbitant interest rates. Below are some actual cases that have taken place in the rural areas of the country* They reflect the pressing need for legitimate credit facilities to provide assistance to the small farmer. 21 Ruben F. Santos, loe. clt. 29 1. A former provincial official borrowed 1,000 pesos ($500,00) from a money lender on a sixty-day term at the rate of 20 per cent a month. At the end of the period, he paid on the interest alone the sum of *+55 pesos ($227.50). 2. Another case was that of a woman who borrowed 1,500 pesos ($750.00) from an alien merchant. She paid all the yearly produce consisting of 12,000 coconuts j from her mortgaged property for the annual interest j alone, 3. In the Central Luzon area, it is reported that money lenders charge 50 per cent interest on loans made during the planting season of rice, payable at harvest time. For every two sacks of rice borrowed by the farmer for family subsistence, he pays back three sacks at harvest time in a system called terclo or a third. On many occasions, the money lender waits with empty sack in hand even while the farmer is still threshing his palay, ready to collect his "pound of flesh.** *+. The practice of mortgaging one*s rice field costs many farmers their land. Usually, the money lender is the big landlord or the merchant in the com munity, on the agreement that the mortgagee gets all the harvest from the land mortgaged as an annual interest. In most cases, contracts of that nature lagged for years. The farmer was unable to save enough money to pay his debt, and finally, he just had to part with his piece of land.22 Lack of an orderly marketing system. "The picture is almost desolate," commented Secretary Oscar Ledesma of the Bureau of Commerce and Industry, for "while we have the bottle, aliens hold the cork.1 1 ^ The truth of that Marino Corpus, "Two Years of Rural Banking,** The Philippine Yearbook of Commerce and Industry (Manila: National Printing Company, Inc., 1955)> p. ol. 23 Oscar Ledesma, Secretary of Commerce and Industry (mimeographed copy of address delivered before the Baguio Chamber of Commerce in Baguio City on March 25, 195^)• statement may best be illustrated through a few actual easesj I showing the manner in which the farmers market their 2b produce. In the rice-producing regions of the country for instance, the farmer either sells his palay immediately ! after harvest or deposits the same in a warehouse. Usuallyi the merchant, the warehouseman, and the mill operator are one and the same person. If the farmer deposits his palay in the warehouse, the warehouseman extends to him loans deductible later from the liquidated price of his deposit. In this particular case, no storage, insurance, or shrink age fee is charged the farmer if he later decides to sell his deposit to the warehouseman, but if he withdraws his deposit, he has to account for other charges in addition to those mentioned. As a result, rather than pay so many charges, the farmer sells his palay to the warehouseman, the liquidated price of which is usually lower. The farmer loses either way. In the tobacco-producing regions, the farmer encoun ters many problems when he is ready to market his crop. Usually, the farmer is compelled to market his crop even before he has harvested it because of financial necessities] Because of his ignorance in the classification of his crop, pit Cornelio Balmaceda. ’ ’ The Rehabilitation of Philip pine Commerce and Industry,” Second Annual Report of the Secretary of Commerce and Industry (Manila: Bureau of Printing, 1952), p. 32.______________________ _____^_ he often indulges in ruinous competition with his fellow farmers who are also in the same predicament. Unscrupulous buyers grade the crops for the unsuspecting farmers and more often, crops which should have been classified as first grade. are graded poor. Competition is eliminated by the practice of giving advances without interest to the farmers with a promise that they shall also be paid the highest price for their crops on condition that the farmers sell their crops to whoever made such offer. This eliminates the possibilities of getting a better price for the crop because other buyers are pushed out of the picture. For want of an orderly marketing system, the farmer has fallen under the control of well-organized and strong combinations of buyers and middlemen. The same condition exists in the marketing of corn. The corn growers, like the rice and the tobacco producers, do not receive the benefits of an open competitive buying system. The lack of warehousing facilities is very much a contributing factor in the already many problems faced by the small farmer. In summary, the small farmer is in a pitiable con dition, indeed* He lacks sufficient land, and his land often lacks sufficient productivity to provide even a subsistence-level income for him and his family. Although he and his fellow farmers account for 62.3 per cent of the nation*s workers, they produce only two-fifths of the nation's income. Because of their ignorance and their lack of capital, they cannot employ improved farming methods. jMany have credit needs which are not being met, or market- j I jing arrangements which are unreliable and often disastrous.j Many of them are tenants; some, wage earners who receive 1 wages below the legal minimum because they do not know how to enforce their rights. Since such a high proportion of the Philippine families live in the rural areas, their distress is the nation's distress. It is of prime importance, therefore, to deal adequately with the rural reconstruction of the country as a whole, for therein lies her national survival. As mentioned earlier in the chapter, the government hopes to meet the needs of the rural areas through the application and use of an organized cooperative system. CHAPTER IV A HISTORICAL REVIEW OP THE DEVELOPMENT OP THE COOPERATIVE MOVEMENT IN THE PHILIPPINES j Having looked at the plight of the small farmer and 5 jat the effectiveness of early cooperative practices such asj "the barangav. turnuhan. hangosav. and gamal. the government) of the Philippines launched a cooperative movement with the hope of insuring the welfare of the Pilipino people in the distressed rural areas. This chapter is mainly concerned with the progress of the cooperative movement in the Philippines in the last fifty years. I. THE AGRICULTURAL CREDIT COOPERATIVE ASSOCIATIONS The dominance of agriculture among the Filipino people gave rise first to Agricultural Credit Cooperative Associations. 1907— Launching of the cooperative movement. In I 1907j the seed of a cooperative movement was planted in Philippine soil by the late Senator Teodoro Sandlko of Bulakan. The senator introduced a bill which sought to establish Rural Credit Cooperatives In the country. But when the bill waspresented for approval to the Philippine Commission, at that time the upper chamber of the Philippine Legislature, it was disapproved.1 In the same year, the Philippine Commission induced private capital to invest in an agricultural bank and a guaranteed annual income of 5 per cent in investments was ioffered to individuals and corporations, but this induce ment failed.^ 1908— First Agricultural Bank. In 1908, the govern- jment took the initiative in organizing the Agricultural 1 Bank of the Philippines, since private capital was not ofrtheoming. The bank was originally capitalized at one million pesos ($500,000). By 1916, it had loaned out an aggregate amount of F5>082,560.00 ($2,5^1>280.00)• But it was ineffective in meeting the needs for agricultural development owing to limitations in capital, which was frozen in long-term loans. The lack of trained personnel and discounting facilities also contributed much to this failure. ^’ ’ Historical Development of Cooperatives,” Handbook on Cooperatives issued by the Cooperatives Administration Office (Manila: Ilaya Press, July 6, 1953)> PP» 3-7. 2 B. Marino Corpus, "Development of Rural Banking,” Central Bank Hews Digest. Manila. VII (January 3> 1955)> 72-76. 3 First Annual Report. Rural Banks Administration, Central Bank of the Philippines, 1953, pp. 1-6. 35 1915— The Rural Credit Law. In 1915* The success of cooperatives abroad (Europe) captured the interest of the government. This resulted in the approval, on February 5th, of a bill presented by Congressman Rafael Corpus. Thence forth, the bill was known as Act 2508, or the Agricultural Credit Cooperative Law, or the Rural Credit Law. It was the culmination of several attempts by leaders of the country since 1907 to introduce a system of credit coopera tion. It authorized the establishment of a system of f agricultural credit cooperative associations to operate ! ; h ' 'under accepted cooperative principles and practices. j i i ' I j Administration of the law was placed under the Executive Secretary to the President. However, the Execu tive Secretary had no means by which he could organize the associations called for in the law. As a result, for a year, the law was inoperative until an amendment was passed, placing it under the Bureau of Agriculture. A Rural Credit Division in the Bureau was formed to supervise the implementation of Act 2508. 1916— The Philippine National Bank. To further aid agriculture, the government in 1916 merged the assets of the Agricultural Bank of 1908 with those of the newly organized Philippine National Bank. ^"Historical Development of Cooperatives," loc. cit. ^First Annual Report. Rural Banks Administration, - «£!£ * ___________________________________________________________j 36 The new bank was capitalized at twenty million pesos 6 ($10,000,000). The bank*s charter provided for loans for agricultural, industrial, and commercial purposes. Except for initial difficulties in operation encountered in the years between 1917 and 1922, the bank has been a major \ instrument in the economic development of the country. However, the credit needs of the small farmers have not been adequately met. 1919— The Bice and Corn Fund. In 1919? when the Philippine National Bank was having its most difficult time., 7 ! !the government passed Act 2818, which provided for the I 'creation of a Rice and Corn Fund. An initial appropriation of one million pesos ($500,000) was earmarked for loans to farmers for the purpose of increasing the production of rice and corn. Through the rural cooperatives organized under Act 2508, this Fund became the principal source of financial aid for agricultural credit cooperatives. 192*+— The Guanco Act. With greater concern towards the financial support of agricultural activities, the so-called Guanco Act or Act 315^ was passed in 1921 +. This law authorized the establishment of agricultural banks with 6Ibid.. p. 2. ^Ifeid.. p. 3. 37 a minimum requirement of only fifty thousand pesos ($25, 000) . i There was no response except the short-lived bank of 8 Pangasinan. | 1930— Acts 389? and 3896. Meanwhile, by 1930, the credit problems of the small farmer had become a national issue. A Rural Bank Commission was set up to study and recommend the most effective way of extending credit facili ties to the small farmers. To implement the recommendations of the Commission, Act 3895 was passed, thereby authoriz ing the Philippine National Bank to create and request the !operation of Rural Credit Associations. Act 3896, which ] Accompanied the first Act mentioned, further authorized the; j same bank to organize rural banks• This move, however, resulted in the organization of only seven associations under Act 3895 and only two rural 9 banks under Act 3896. An investigation of their activities revealed the following weaknesses: 1. Mismanagement due to lack of trained personnel. 2. The lack of proper understanding with regard to the true aims and purposes of agricultural credit cooperatives. 3. The improper use of credit by the borrowers who spent the money instead on unproductive acti vities, such as the town fiestas. Q Ibid. ^None of these are in operation anymore. The Philip pine National Bank*s records of pre-war operations were all destroyed during World War II._____________________________ 38 *+. Defective securities pledged. 5. Politics. 6. Lack of compensation for the officers. 7. Inadequate supervision.'*"0 Due to these weaknesses in the system, the govern ment transferred the supervision of the rural credit associations to the Bureau of Commerce and Industry on March 31, 1933.11 1936— The Agricultural Cooperative Fund. The Rice and Corn Fund was renamed the Agricultural Cooperative Fundi Its scope of operation was broadened to include the activi ties of both the agricultural credit cooperatives and the 12 cooperative marketing associations. 1939— First twenty years of the Rural Credit Lawts operation. Twenty years from the time the Rural Credit Law first took effect in 1915» the agricultural credit coopera tive associations organized within the inclusive period mentioned, reported that only 35»01 +1 members out of a total membership of 105,081 * - had availed themselves of the facilities offered to them; that 571 associations were "^"Historical Development of Cooperatives,” loc. cit. ^Memorandum Order Mo. 11, Department of Agriculture and Commerce, Manila, Philippines, February 28, 1933. I 12 i First Annual Report. Rural Banks Administration, loc. cit. 39 organized in forty-three provinces and that the total circulating eapital of all amounted to three million pesos ($1,500, 000).13 19^9— The Agricultural and Industrial Bank. Addi tional efforts of the government toward the goal of extend ing credit facilities to the smsill farmers resulted in the establishment of an Agricultural and Industrial Bank. The bank was capitalized at one hundred and fifty million pesos ($75*000,000) to meet the demands for long-term capital funds. Within a period of two and one-half years of • N existence, twenty-four million pesos ($12,000,000) for agricultural and four million pesos ($2,000,000) for 1*+ industrial purposes were granted in loans. World War II interrupted the program. 1m r -The Commodity Corporations. These corporations were established to deal with the problems of particular industries of the country, among which were the following: abaca industry— National Fiber Corporation (NAFCO); coconut industry— National Coconut Corporation (NACOCO); tobacco industry— National Tobacco Corporation (NATOCO). 1^ JNone of these are in operation anymore, although forty-four are still kept alive for purposes of recording unpaid debts only, according to the reports from the Cooperatives Administration Office. l*f First Annual Report. Rural Banks Administration, o p . cit.. p. 2 . ___________________ ___________________________________ *fO All these corporations were engaged in the lending operations, which were for the most part in the nature of marketing loans for the purpose of stabilizing commodity prices.^ 1 j 19^0— The National Trading Corporation and the Agricultural Cooperative Fund. The regulation of all the agricultural credit cooperatives organized under Act 2508 was transferred from the Department of Commerce and Industry to the National Trading Corporation. Transferred also to the supervision of the latter was the Agricultural Cooperative Fund, formerly the National Cooperative Fund, renamed for the third time. 19*4-0— The Cooperative Law. Most significant in the progress of the cooperative movement was the passage of Act 565 or the Cooperative Law, which became the general law of the land on cooperatives. This came about due to the interest of the late President Manuel L. Quezon in improving the living standards of his people. ( The new law . allowed fifteen or more persons who are citizens of the Philippines or of the United States to form cooperative associations . . . which, for the first five years of their operation shall be exempted from all 15 Ibid. (These corporations are in the process of liquidation at the time of this writing.) hi taxes and government fees ... of whatever name and description.” The Act authorized the National Trading Corporation to carry on the administration and supervision of all cooperatives. 19^1— The National Cooperatives Administration. In the latter part of 19^1, the National Cooperatives Adminis tration was created; it took over supervision of coopera tives from the National Trading Corporation. The outbreak of the second world war, on December 8, 19^1, cut short its activities. 19^-5— Post war. After World War II, the National Cooperatives Administration resumed its functions. However, on October *f, 19^7* the National Cooperatives and Small Business Corporation was created to replace it.^ As a consequence of the reorganization, the NCSBC was abolished and its powers, duties, and functions were transferred to, vested in, and assumed by the Cooperative Administration 18 Office under the Department of Commerce and Industry. Commonwealth Act 565* Handbook on Cooperatives (Manila: Cooperatives Administration Office, 1953), p. 167. 17 Executive Order No. 21, Philippines, October 19^7. 18 Executive Order No. ^6*+. Philippines, November 10, 1950. I h2 ; / I The newly created agency, once more under the Department of i Commerce and Industry, again took over the supervision, regulation, and promotion of all types of cooperatives. 19*+7— The Rehabilitation Finance Corporation. The |assets of the Agricultural and Industrial Bank of 1939 were merged and absorbed by the Rehabilitation Finance Corpora tion which commenced operations on January 2, 19^7> with an authorized capitalization of three hundred million pesos ($150,000,000). The preamble of the Charter of the Corpora tion stated that it shall "provide credit facilities for t the rehabilitation of agriculture, commerce, and industry, the reconstruction of property damaged by war, and the 19 broadening and diversification of the national economy.’ * Included in the list of its corporate powers was the grant ing of loans to cooperative associations to facilitate production and marketing of crops and the acquisition of 20 essential commodities. . By 1952, credit facilities for agricultural purposes was available only through the Philippine National Bank and the Rehabilitation Finance Corporation. Twenty-five per cent of the total loans granted by the Philippine National 1^Republic Act No. 85. Philippine Government, 19^7• ^®The Rehabilitation Finance Corporation and Its Accomplishments. a Handbook issued by the Rehabilitation Finance Corporation, Manila, Philippines, 19*+9j P» 7« *+3 21 Bank represented loans for agricultural purposes. It operated thirty-two tranches and in addition, maintained sixty agencies in selected capitals and provinces. The Rehabilitation Finance Corporation, order to meet the I rehabilitation requirements of certain crops, established branches in selected producing areas, such as Davao, Cebu, 22 Cagayan de Oro, Ilagan, Isabela, and Iloilo. In spite of the concerted efforts of both the Philip pine National Bank and the Rehabilitation Finance Corpora tion, there was still a pressing need for a more specialized agency which could handle better the credit requirements of the small farmers. In response to this need, the government passed Republic Act 821, which created the Agricultural Credit and Cooperative Financing Administration. 19*4-7. . -The Agricultural Credit and Cooperative Financing Administration. The Agricultural Credit and Cooperative Financing Administration is an independent agency financed by government funds and exclusively engaged in the fostering of farmers® cooperatives and in the grant ing of small-term loans to the members of the cooperative associations. As provided for in the Act itself, the agency, called the ACCFA for short, was created ”. . • to 21 First Annual Report. Rural Banks Administration, loc. cit. 22 Ibid. jassist the small farmers in securing liberal credit and to promote the effective grouping of farmers into cooperative associations to enable them to market their agricultural commodities efficiently and to place agriculture on the 23 basis of economic equality with other industries♦'* II. THE COOPERATIVE MARKETING ASSOCIATIONS Much has been done to assist the small farmer in his credit problems. However, there is no orderly marketing system to guide him. Because of the lack of knowledge with regards to the manyfoetors affecting the price of his pro duce, the money he often gets from the sale of his product does not repay the time and effort expended to produce it. Describing the marketing practices of the small farmer, the Honorable Cornelio Balmaceda said: He takes his small quantity of rice, tobacco, or corn, as the case may be, to the owner of the small store of the locality, who usually is an alien merchant| acting as a local buying agent for other merchants, and! exchanges them for his necessities, like kerosene, clothes, and farm implements. In the transaction, the farmer1s goods are priced very low, while the articles he gets from the store in exchange are priced very high ... the middleman derives profit twice from the transaction, on the articles bought from his store, and on the resale of the products he receives from the 0 farmer.24- 23 Republic Act No. 821. Second Congress of the Repub lic of the Philippines, H. No.. 3231. Sixth Special Session, Manila, Philippines, Atigust l*f, 195^. pif Cornelio Balmaceda, "The Rehabilitation of the Philippine Commerce and Industry,*1 Second Annual Report of the Secretary of Commerce and Industry (Manila: Bureau of J Printing, 195277 p. 32. j h5 Cooperative marketing associations appeared sporadi cally in the tobacco growing areas in the Cagayan Valley, but it was not until 192*+ that the government took the necessary steps to encourage the organization of agricul tural cooperatives. 192*+— The Tobacco Industrial Committee. On August 2, 192*+, the late Governor Leonard Wood approved the recommendations presented to him by the Tobacco Industrial Committee ’ ’that cooperative marketing associations among the tobacco growers of the Cagayan Valley be encouraged, promoted, and organized to eradicate the many evils and abuses practiced by traders and middlemen on the small 25 farmers in the marketing of the latters* products.” The recommendations were placed under the supervision of the Bureau of Commerce, with the help of the Bureau of Plant and Industry which educated the farmers in the use of bettei methods of raising and curing tobacco. Assistance also was given by the Bureau of Internal Revenue which taught the farmers how to grade and bale their tobacco leaves so that j they could command a better price in the market. Together,! the three agencies pooled their resources and facilities to i educate the farmers on the advantages of cooperative marketing. 25Leopoldo Teodosio Ruiz, citing Jose A. Carpio. ’ ’ Cooperative Marketing” (mimeographed pamphlet issued in Manila, n. d.).____________________________________________ ! I ! This campaign resulted in the organization of the I Tuguegarao Tobacco Growers* Association, Inc. and the 26 Ilagan-Isabela Tobacco Growers* Association, Inc. The cooperative marketing associations were governed by the Act 11*59 or the Corporation Law, 1927— - The Cooperative Marketing Law. On December 9> 1927, the government enacted Act 3**25, known as the Coopera tive Marketing Law. It provided for the organization of cooperative marketing associations among farmers and persons actually engaged in the production of agricultural 27 products. f A report of the Bureau of Commerce ten years after the Cooperative Marketing Law‘ was passed showed a total of li*9 cooperative marketing associations registered, with an approximate membership of five thousand farmers. Only 70 of 28 these associations,^however, were considered active. In 1939* two years later, another report from the same source showed a total of 160 associations of the same nature organized and registered, but of which only 33 had reported 26ibid. 27 "Historical Development of Cooperatives," Handbook on Cooperatives, loc. cit. 28 Leopoldo Teodosio Ruiz, citing J. J. Angeles, "Cooperative Marketing of Farm Products." Philippine Journal of Commerce, XV (October-November, 19395, 3!?« I ' ' ” ^7] the sales of their products, valued at F5,529j058.00 (#2,76^f,529.00).29 An investigation of the matter revealed the follow ing causes of failure: ! | 1. Lack of capital. 2. Mi smanagement• 3. Inadequate marketing facilities. *f. Disloyalty of members due to their inability to comprehend the true aims of cooperation.3u To meet these causes of failure of many of the cooperative associations, the government extended the scope of the Agricultural Cooperative Fund, formerly the Rice and Corn Fund, to include the marketing associations. Commodity corporations were also established, the operations of which were designed to help stabilize commodity prices. The Cooperatives Administration Office. Realizing the need for more planning in the marketing system, the Department of Commerce and Industry launched an intensive program with this need as the goal. Its execution was placed under the direction of the Cooperatives Administra tion Office, a new government agency entrusted with the organization and supervision of all types of cooperative associations. Various teams of field organizers from the ^ ’ ’ Historical Development of Cooperatives,” Handbook on Cooperatives, o p . cit.. p. 3» _______3°Ibid.. pp. 5-6.____________________; _______________ | b8 I CAO and the Bureau of Commerce were assigned to places where the need for producers* cooperative associations existed. These teams were instructed not to leave their assignments until if the cooperatives they helped organized were stable in their operation. In the campaign, the field organizers taught the farmers the value of cooperative enterprise. Among the points stressed were: 1. By grouping themselves into cooperative associa tions, they can secure better prices for their produce• 2. Improved production methods will increase the yield of their farms or plantations. 3. It will be easier individually or collectively to borrow money from the government banks or from private credit institutions. k. Most important is the advantageous position which members can derive in the disposal of their produce.31 The campaign resulted into the organization of more and more cooperative associations. The facilities and per sonnel of the GAO was limited, and so to cope with the increasing need for closer supervision, the government passed Republic Act No. 821, thereby creating the Agricul tural Credit and Cooperative Financing Administration. 31 Seventh Annual Report. Fiscal Year 1952-1951. Cooperatives Administration Office (Manila: Cooperatives Administration Office, August 12, 1953)> P* !• I III. THE CONSUMERS* COOPERATIVE ASSOCIATIONS The need for Consumers* Cooperative Associations sprung from the dominance of alien traders in the domestic and retail trade of the country. Many of these alien mer chants are Chinese who have been part of the Philippine scene for centuries. They control the channels of dis tribution through which the prime commodities and the major export industries of the country are being bought and sold.33 When prices of prime commodities rose, shortages in the supply of prime commodities occurred. Alien control of 31+ the retail trade was believed to be responsible. The retailers complained about their lack of capital and the absence of adequate marketing and distribution facilities. To wrest control of the domestic trade from alien hands, cooperation has been tried.3^ Several attempts were 3^David Bernstein, The Philippine Storv (New York: Farrar, Straus and Company, 19*+7), p. 23. 33Jose G. Sanvictores, ’ ’ Winning Control of Our Import! Trade,” Philippine Yearbook of Commerce and Industry. 1955, P. 21. 3lfThe following bills, passed during the Third Con gress of the Republic of the Philippines, expressed this belief by the congressmen who sponsored them: H. No. 275, Reynaldo P. Honradoj H. No. 2291, Wenceslao R. Lagumbay; H. No. 1996, Daniel 2. Romualdez, Tobias Fornier, Godofredo P. Ramos, Eulogio Rodriguez, Jr., Constancion E. Castaneda, Florencio Moreno, and Wenceslao R. Lagumbay, jointly. „ 35Bonifaelo A. Quiaoit, ’ ’ The Bureau of Commerce and the Retail Trade Nationalization Law," The Philippine Year-, book of nomtne-r^<a_.and-Indus.tr-y-.-1955-.-P«—51.----------------i I ! made to introduce bills in the National Assembly with the objective of helping the Filipino retailers. None material ized; however, those who saw the need for united action mobilized their convictions into action. 1916— Forerunners of consumers1 cooperatives. The t I first consumers* cooperative association in the Philippines Iwas the College Cooperative Company, otherwise known as the ILos Banos Cooperative, established in October 20, 1916. I It started with seventy members, all of whom were faculty members, students, and employees of the College of Agricul ture and the College of Forestry of the University of the Philippines. It had an authorized capital of PM-,000 ($2,000) which was divided into eight hundred shares, each with a par value of five pesos ($2.50). This initial capitalization was raised later to JPlO,000 ($5,000). An inventory of its operation taken on December 31, 1937 showed that the association had a paid-up capital stock of F6,8*+3.25 ($3,^21.63) with an accrued gain of ?1,902.50 ($951.25).37 3^L. T. Ruiz, citing Anastacio de Castro, ’ ’ The Cooperative Movement and the National Trading Corporation,” (mimeographed form, n.d.), p. 3* 37IM£* > citing ”The Los BaSos College Cooperative,” The Cooperator. I (June, 1939), 15. e The Dumaguete Consumer1 Cooperative was another fore- jrunner of a consumers* cooperative development in the I O Q Philippines today. It was organized in July, 1936, jinitiated by the faculty members of the Siliman University I I of Oriental Negros. Before the association was set up, the | iorganizers tried to convince would-be members of the merits of cooperative aiterprise. Pamphlets and other informative materials printed in the native and English language were handed out; these aroused the interest of the town people, officials, teachers, and the students. This campaign brought in a paid-up capital of J?500.00 ($250.00) with a total membership of fifty. A 1939 report of the associa tion showed that its capital had increased to ?1,700 ($850) and the membership to more than a hundred. 1938— The Consumers* Cooperative League of the Philippines. In 1938, the government took the first move to encourage the organization of consumers* cooperatives. The Secretary of Agriculture directed the Bureau of Commerce and Industry to promote the organization of consumers* cooperative associations and Filipino retailers associations. The first project undertaken was the organization 39 of a Consumers* Cooperative League. It was a private ^®Ibid., citing ’ ’ Dumaguete Consumers* Cooperative," The Cooperator. I (June, 1939)j 16. 39 "The Consumers* Cooperative League of the Philip pines, Inc.," The Cooperator. I (June, 1939)> 13. 52 jentity, but was launched under the sponsorship of the Bureau of Commerce and Industry. The League was incorpo rated in May, 1938 as a non-stock corporation, the main |purpose of which was to direct the promotion of consumers1 i ; jcooperatives all over the country. Through its Central ; i i ! Buying Department, the members placed their orders at | wholesale prices. From the ten duly registered associations affiliated with the League, in 1939> the total number had increased to sixty-eight with a total combined membership of over seven thousand. These associations had an average capitalization of F620 ($310) and an average sale of j?975 ($*4-87.50), while their membership ranged from 5 * 4 - to 226. In 19*4-0, through the League*s council, which con sisted of prominent and civic-spirited Filipinos who were interested in the movement, the first Cooperative Institute Conference was held in Manila. The Institute deliberated on the need for a strong cooperative movement, outlined specifically the objectives which they hoped to achieve, and studied the role which the government might take to help promote the movement. The Cooperative Institute of the Philippines was created, as a result, a permanent body assigned with the responsibility of administering the business and other affairs of the League. Every consumers* cooperative association affiliated with the League has certain obligations to perform, namelyt 53 Every member association has to have at least fifty members to start with. Each member in an association must pay the amount of F’ l.OO ($0.50) as membership fee to cover j educational and other incidental expenditures,j F0.20 ($0.10) of which goes to the League as j affiliation fee• i 1 ! An equivalent of 2 per cent of the gross earn ings of every member association must be paid to the League as an annual due. Fifty per cent of each member association's invested capital must be turned over to the League, which will be merged with other similar funds from other member associations to form part of the general fund, which the League will invest in the purchase of wholesale- priced merchandise, for distribution to all concerned. *+0 Funds deposited with the League earn a fixed interest of not more than 5 per cent when deposited in the League's treasury. Likewise, all purchased made by the member associations from the League were allowed their correspond ing patronage dividends. Strict adherence to the principles LlT of cooperation which catapulted the Rochdale pioneers into the history of world cooperative movement was observed, War years. As previously mentioned, when the Cooperative Law was passed in 19*+0, the National Trading Corporation took over the responsibility of promoting and supervising all types of cooperative associations organized before and after said law was passed. j+Qlbid. Ryllis Alexander Galin, Cooperatives. Headline Books, No. 8, The Foreign Policy Association, New York, The National Trading Corporation was replaced hy the National Cooperative Administration, but the latter*s opera tion was abruptly cut short by the sudden outbreak of World fux-ujs-e out, it was observed that the cooperative spirit was -very strong during this time. j The occupation Minister of Economic Affairs, Hon. Pedro Sabido, initiated the revival of the movement. He directed the organization of the Manila Consumers* Coopera tive Association, with the help of Dr. Pablo N. Mabbun who educated the members and officers of the associations on I lO the principles of cooperation. Not very long after, the liberation forces arrived. Post war. Immediately after liberation, the Economic Cooperation Administration organized cooperatives to be used as outlets for the distribution of relief goods L j .3 to the people. There was a shortage of personnel and the need for cooperatives was acute. The registration of cooperative associations without proper indoctrination of the people who administered them, and the members them selves, resulted. Although the NCA was rendered inoperative when war "Historical Development of Cooperatives,” Handbook loc. cit ^3 Ibid 55 In such a confused state of affairs, the National Cooperatives Administration was revitalized to resume func tions disrupted by World War II.' It was replaced later by ! I the National Cooperatives and Small Business Corporation. |By virtue of Executive Order No. 36*f of November 10, 1950, j jfurther change was again effected through the Cooperatives Administration Office; another new agency placed under the Bureau of Commerce and Industry. The Cooperatives Administration Office. The Cooperatives Administration Office took over the promotion and supervision of all types of cooperative associations. In 1952, the passage of Republic Act No. 821 created the Agricultural Credit and Cooperative Financing Administra tion, which assumed the exclusive task of organizing and I f l f supervising farmers* cooperative marketing associations. From then on, a directive of the Secretary of Commerce and Industry, dated September 2b, 1952 authorized the Cooperatives Administration Office to take over its new responsibility, which was: ... to organize Filipino consumers into strong cooperative associations, and to enlighten them on the value of cooperative undertaking in the country*s economic development. Many Filipino consumers are stir, in the dark as to the advantages of cooperation and the measure being taken by the government to assist them in forming cooperative associations. It is therefore ^Republic Act No. 821. loc. cit. 56 imperative that you carry out a more vigorous and ; extensive campaign to accelerate the organization of, more and "better consumers* cooperative associations.^5 The Cooperatives Administration Office faced with a jnew task outlined its objectives. They were as follows: | t | 1. Primary Objective— To organize the Filipino | | consumers into strong cooperative associations;' j to reactivate non-operating cooperatives. ! 2. Secondary Objective— Not to take the initiative but simply to assist in the promotion and organization of other types of cooperative associations, possibly within the means and facilities of the Office, which could be under*? taken without detriment to the primary objective. 3. Specific Objectives— To organize at least two cooperative associations into model consumers* cooperative associations, in the districts of Manila; to organize one model consumers* cooperative association in San Fernando, La Union, in Malasiqui, Pangasinan, in Batangas, Batangas, and in Dipolog, Zambaanga.^ The ultimate aim of the CAO was to lay the ground work for formation of a cooperative wholesale society. At the end of fiscal year 1952-1953? a total of eighty coopera tive associations with 2,698 members and an authorized eapital of ?33,837.00 ($16,918.50), were organized and k? registered with the Securities and Exchange Commission. ^Seventh Annual Report, Fiscal Year 1952-1953* Manila, Cooperatives Administration Office, p. 1. U-6 Ibid., pp. 1-2. Ibid.. p. 2. 57 The UNIFIRCA— United Filipino Retailers and Coopera tive Association. To strengthen the campaign for the establishment of a cooperative wholesale society, the UNIFIRCA, or United Filipino Retailers and Cooperative jAssociation held its first national convention on November I *+8 * 128, 1952. The UNIFIRCA is an organization of Filipino j i merchants, whose objectives include the wholesale importa tion of prime commodities to help lower and stabilize prices, unmasking fake importers, dummies, and ghost retailers, whose illegal business activities are causing injury to the domestic trade of the nation, and to place the Filipino merchants in a better competitive position with their alien competitors.^ Highlight of the convention was the unanimous approval of a plan to establish a cooperative wholesale society, which, in the words of Secretary Balmaceda of the Bureau of Commerce and Industry, shall "enable the coopera tives to secure for their members the advantages, which, without such an organization, would remain the exclusive 50 privilege of big concerns."' ^Ibid. IfQ American Chamber of Commerce Journal. 30:6, June, 195ik 50 ' Seventh Annual Report. Cooperatives Administration Office, loc. cit. 58 The need for a cooperative wholesale society again was voiced in a national convention of Cooperative Associa tions held on March 28, 1953. The delegates proposed to establish a Cooperative Bank for the exclusive use of jnon-agricultural cooperatives. The following problems jwere considered: j 1. The lukewarm attitude of the masses towards the j movement. It was believed that this stemmed i from four basic causes, namely: mismanagement, of the cooperatives; lack of trueknowledge of the theories, aims and practices of coopera- i tion; the individualistic attitude of the people; and lastly, the lack of adequate financial assistance. 2. The failure of cooperative associations was attributed to the following causes, namely: lack of capital; inadequate supply of goods; lack of experts on cooperative banking, and management and operation of consumers* cooperative stores at the local level and of a wholesale cooperative society on a national level; lastly, lack of trained personnel.51 The enactment of laws designed to encourage more Filipino participation in the retail trade of the country was the outcome of the campaign to have a wholesale cooperative society. The Retail Trade Na tionallzatlon Law. The Retail Trade Nationalization Law, otherwise known as Republic Act No. 1180, is a restrictive measure intended to restrict the 51 Ibid.. pp. 21-22 59 participation of aliens in the retail trade of the country 52 and to place it ultimately in the hands of the Filipinos. As of Kay 15» 195*+} the new law took effect; aliens were no longer granted licenses to engage in retail busi ness. For those already in business prior to the passage j | jof the law, permission to continue operations extended to jtime of death, or voluntary retirement of the proprietor. In the event of death, the heir, the administrator, or the executor of the deceased alien businessman could continue the operations of the business only for purposes of liquidation, or a period of not more than six months. In the case of a jurdical entity, its operation was limited (for a period of ten years from the date the law was approved, or until the expiration of the term of the asso ciation, or partnership, or corporate existence of the corporation, whichever event comes first. Paragraph 2 of Section 1 contained a clause which exempted American citizens and juridical entities from the provisions of the law, in accordance with the Executive Agreement which was signed between the Republic of the Philippines and the United States of America on July *+, 19*t6. 52 Republic Act No. 1180, 1 1 An Act to Regulate the Retail Business in the Philippines,n Manila, Philippines (Manila: Bureau of Printing, June 19, 195*+)• 60 The Filipino Retailers1 Fund. The lack of adequate capital was believed to be one of the more serious problems of the cooperative associations. In answer to this need, the government enacted Republic Act No. 1292, and the Filipino Retailers* Fund was created, and was made available to the followings 1. Any natural person of legal age, of Filipino citizenship, or any association, partnership, or corporation duly registered with the Securities and Exchange Commission, the capital of which was wholly owned and managed by Filipino citizens, whose occupa tion or calling was habitually selling direct to the general public, articles, goods, wares, and merchandise for use and consumption, and who was actually engaged in the business of retailing and having a definite place of business open to the general public with sufficient space for displaying and storing stocks of merchandise. 2. Any natural person of legal age, of Filipino citizenship, or any association, partnership, or corpo ration duly registered with the Securities and Exchange Commission whose capital was wholly owned by Filipino citizens, who intended to put up a retail store and to engage in the retail business; provided, that such retailer had to be duly licensed and must have estab lished the retail store in a manner that was ready for operation; and provided, further, that such retailer must have invested an initial capital which was at least equal to the amount of the loan being applied for.53 An appropriation of twenty million pesos ($10,000,000) was placed into the Fund to be administered by the Philip pi* pine National Bank, To facilitate the processing of all 53 Perfecto E. Laguio, “Retailers* Fund,*1 Philippines Free Press. 4-7:6, February 11, 1956. ^Salvador P. Bigay, "Legislation to Help Filipino Retailers," This Week— Manila Chronicle. 11:50, June 10, _19-56.________________________________ : _____________________ applications for loans, the Department of Commerce set up the Guidance Division. The maximum amount of loan a quali fied applicant could get was five thousand pesos ($2,500) at the rate of per cent per annum, not collectible in advance• The National Marketing Corporation. The inadequacy of supply at reasonable prices for resale purposes was believed to be one of the causes of failures of many | jconsumers* cooperative associations in the past. The need jfor a wholesale cooperative society was met when Republic |Act No. 13^-5 was enacted, thereby creating the National 'Marketing Corporation, known as the NAMARCG, on June 17, I1955* Section 1 of the Act expressed the desire of [congress: ... to assist Filipino retailers and businessmen by supplying them with merchantable goods at prices that will enable them to compete successfully in the open market so that they may have greater participation in the distribution system of our economy. In order to do this, it is necessary that a government corporation be created for the purpose of engaging in the activities of procurement, buying and distribution of merchantable goods to Filipino retailers and businessmen not for the purpose of making profit but to render an essential phblic service in order to promote the social and economic welfare of the Nation.55 Section 6 of the Act provided for the capitalization of the NAMARCO. A revolving fund was set up with an 55 JtePhfrliC Asi l£. 131+5, "An Act Creating the National Marketing Corporation and Dissolving the Price Stabilization Corporation, Appropriating Funds Therefore, ancLfor Other Purposes (Manila: Bureau of Printing, June, 195?) 62 authorized capital of thirty million pesos ($15,000,000), subscribed entirely by the Republic of the Philippines, and paid out of any general fund in the National Treasury in the following sums: ,(a) ten million pesos ($5,000,000) upon the approval of the Act; (b) the sum of ten million pesos ($5,000,000) for every fiscal year thereafter for a period of two years. To place the Filipino retailers on a more competitive basis, the government gave them technical and other forms of assistance, such as foreign exchange restrictions, designed to work to their advantage* During the years 1953-1951 *, official statistics showed 88 per cent of the total retail outlet establish ments as owned by the Filipinos, and only 12 per cent 56 belonging to alien businessmen. However, the Filipinos accounted for only ^3 per cent of the total gross sales during the year, and the aliens had 57 per cent.-^7 The NAMARCO was not the first attempt of the govern ment to help the Filipino retailers. The Price Stabiliza tion Corporation was also established for the purpose of helping the Filipinos become more active in the retail trade of their country. But it, too, failed to prevent the 56 Bonifacio Quiaoit, ’ ’ Trends in Domestic Trade,” Progress f5*+, Times-Mirror Report, 195*+, Manila, Philip pines, p. 135* 57 Jose G. Sanvictores, loc. cit. _____________ _____ I 63! j spiraling of prices of prime commodities because of j ' 58 • •dishonesty among many of the Filipinos themselves. NAMARCO reported that certain government officials were exerting pressure on its operations.'' As mentioned earlier, many Filipinos have taken advantage of their citizenship to obtain licenses to operate retail establish ments and to secure foreign exchange, which they later sold for a quick profit to alien merchants. Despite the fact that there is an Anti-Dummy Board to suppress this 60 practice, it is still common among the Filipinos. The government has tried many times in many ways to support the needs of retailers and consumers* cooperative associations. Experience, however, has shown that the retail trade problem of the country will not be solved until Filipinos learn the value of the assistance extended to them by their government, and to do their part as responsible citizens of their country. ^Editorial in the Philippines Free Press. No. 5, Vol. XLVII, February M-, 13W* 59 Dindo Gonzales, ’ ’Inside NAMARCO,” Philippines Free Press. No. 6, Vol. XLVII, February 11, 1956, p. 16. 60 News item in Industrial Philippines. ’ ’ Anti-Dummy Board Issues Warning,” Manila, Philippines, April, 1955> p. 18. IV. CREDIT UNIONS Reverend Allen Huber, a Protestant minister, organized the first Federal Credit Union within the Protestant Churches in the United States. In the Philip pines, he laid the foundation for the incorporation of the Church of Christ National Credit Union, in 1938* The objectives of his credit unions were: 1. To enable the members to save part of their income after every pay day, with the idea of i accumulating sufficient savings for emergency needs. 2. To meet the credit needs of the members; to free them from usurious money lenders. 3. To educate the members on the right use of their money. *f. To train the members in cooperative enterprise so that they will be able to build a great, free, and economic democracy.61 By 19*+0, there were twelve credit unions all over the Ilocos regions. More followed in the southern parts of the country. When the Cooperative Law was enacted in 19**-0, the credit unions were placed under its jurisdiction. The National Trading Corporation supervised its promotion; this responsibility was later transferred to the Cooperative Administration Office. ^Allen R. Huber.”What Is a Credit Union?1 1 Philippine Journal of Commerce. February, 19H-0. ■ 62ncre(ji-k Unions,1 1 Handbook on Cooperatives (Manila: Ilaya Press, July 6, 1953)> P« 13*+* 65 A 1953-1951 + report of the Cooperatives Administration i Office showed a total of seventy credit -unions organized 63 and registered with the Securities and Exchange Commission. Yet, during the latter part of 195*+> the CAO conducted a survey in the public markets of Manila, which revealed the 61* existence of usury in all these places. Prom past experience, credit unions have been tested and found to be effective weapons in combating usury, but usury will not be wiped out over night. V. SUMMARY A review of the materials in this Chapter shows that much has been done in the field of organized cooperative enterprise since 1907* Much have been learned by way of experience, but not many of the hoped-for-goals have been reached. And it indicates that much remains to be done, if cooperatives are to provide the solution to basic problems confronting the Filipino nation. The credit cooperative associations, the cooperative marketing associations, the consumers* cooperative associa tions, and the credit unions all sprang up in response to the needs of the Filipino people. The government is ^Budget Justification— Fiscal Year 1956, Submitted to the Committee of Appropriations, Congress, by the Cooperatives Administration Office, Philippines. _______6lfIbid._______________ L ________________________ 66 ! I directly engaged in all these cooperative undertakings, since the people have a lukewarm attitude towards the movement. To raise the standard of living in the rural popula tion, to transfer the control of the domestic and retail [ trade of the country to the Filipinos from the hands of the aliens, and to drive away usurers from their evil practices, these hoped-for-goals of the administration have not been reached, but some progress has been made through government legislation, and recently, government support embodied in the Agricultural Credit and Cooperative Financing Adminis tration has established an efficient and orderly marketing and distribution system. With regards to the retail trade problem, the government passed the Retail Trade Nationaliza tion Law, The National Marketing Corporation was created to act as the central wholesale purchasing agency for the retailers and consumers1 cooperative associations. A Retailers* Fund was set up to give financial aid to retailers who needed additional working capital. The reason cooperatives have not achieved more of the purpose for which they were designed may be attributed to the following causes: mismanagement, due to lack of trained personnel; the lack of proper understanding with regard to the true aims and purposes of cooperatives; politics, which has penetrated the system; and lastly, the dishonesty of many who took advantage of their nationality to exploit the benefits extended by the government. In l addition, there existed a lukewarm attitude among the masses toward the movement. A pressing problem is the lack of adequate capital. More experts on cooperative enterprise is needed. For fifty years, the government has maintained its support of cooperatives in the hope that these may be the answer to the social and economic problems of the Filipino people. The success of cooperatives in such countries as the Scandanavian nations, stirred the interests of the Philippine government, and certainly, some nations have 65 employed cooperatives to advantage. Today, Denmark is a shining example to nations with far greater natural wealth. From a nation of tenant farmers, the Danes have become a nation of landowners; 97 per cent of the farmers own their lands.^ The Danes are a people who, by their own efforts, have achieved economic stability and security for their country. From the humble beginnings of organized cooperation in the little English village of Rochdale in the 18001s, the Equitable Society of Rochdale Pioneers handed down the fruits of their discovery 'Donald F. Blankertz, Marketing Cooperatives (New York: The Ronald Press Company, 19^0),pp. *+2-71• 66 Ryllis Alexander Gaslin, Cooperatives (New York: Headline Books, The Foreign Policy Association, 1937)> pp. 5-6. I 68 t |to the nations of the world— to Denmark, Sweden, Ireland, Germany, Japan, India, and many other nations, and now, to | 67 the Philippines. ' The success of cooperative enterprise in other nations gives hope that the cooperative movement in the Philippines may yet reach its goals. 67 Ibid.. pp. 5-6. CHAPTER V COOPERATIVES IN THE RURAL RECONSTRUCTION PROGRAM OF THE PRESENT GOVERNMENT President Ramon Magsaysay, stressing the importance of cooperatives in the rural reconstruction program of the government, said of them in his program for progress: Every effort shall be made to help our farmers raise more crops and earn more income • . • facilities for credit and for cooperative effort will be expanded, not only to provide them with their immediate needs, but to induce the growth of secondary occupations and the development of cottage industries that will keep them occupied during the off-season,! I. THE AGRICULTURAL CREDIT AND COOPERATIVE FINANCING ADMINISTRATION For the implementation of the government policy towards rural reconstruction with emphasis on the use of cooperatives, the Agricultural Credit and Cooperative Financing Administration was created for the expansion of cooperative and credit facilities for the benefit of the small farmers. The Organizational Structure of the ACCFA The Agricultural Credit and Cooperative Financing Administration Is better known as the ACCFA. A Board of liiprogram for Progress,” Speech delivered by Presi dent Ramon Magsaysay at the Far Eastern University, on March 20, 195^* Reprint by the National Media Production Center, Manila, Philippine s._______________________ _________ 70 Governors handles Its affairs, aided by a field office staff, under an Administrator. 2 ! The Board of Governors. The Board consists of a |Chairman and six other members. They are all appointed by f the President of the Philippines, with the approval of the Commission on Appointments. All the powers and functions of the ACCFA are vested in the Board. It channels powers and functions to the Administrator, who, in turn, distrib utes them to the different divisions and unit heads in the general and field offices for execution and supervision. The terms of office of the board members are so arranged as to make it difficult for each of them to obtain the majority*s commitment with regard to each other*s policies. During the first year of operation of the ACCFA, the first two members of the Board were given a term of only one year, the next pair a term of two years, and the last pair, a term of three years. This, in effect, changes the composition of the Board every year. Vacancies by reason of death, resignation, or removal by cause are filled by appointment in the same manner des cribed earlier, and the term is limited to the unexpired term of office of the retired member. 2Republic Act No. 821, ”An Acto To Establish an Agricultural Credit and Cooperative Financing System,” H. No. 3231, Second Congress of the Republic of the Philip- pines, Sixth Special Session.________________________ _____ ! 71 The Administrator. staff and personnel.-* The Chair- I jman of the Board is the chief executive of the ACCFA. He j is referred to as the Administrator. He may be removed < jfrom his office upon expiration of his term, for due cause, i iand by resignation. The Administrator supervises all the i activities of the ACCFA. Assisting him are the following: 1. The General Counsel. The Secretary of Justice is the ex-officio legal adviser of the ACCFA. He appoints a representative to act as the General Counsel to advise the ACCFA on legal matters and procedures. 2. The Regional Supervisors. The provinces are organized into regions. The charter of the ACCFA allows for the establishment of seven regional offices in regions where the conntry,s major export crops are extensively grown and produced. These regional offices are placed under the supervision of the Regional Supervisors. 3. The Provincial Director and Field Force. The field force is under the supervision of a Provincial Director. Together, they administer the activities of the ACCFA in the rural communities. A field force is in itself a team. It is composed of a group of cooperative agents as needed, who are well equipped with the fundamentals of cooperative enterprise. In the team is a lawyer who handles the recording of the business side of the team*s operations,1 3Ibid.. Section 9, P» 5.___________________________ ! 721 ( , and an agriculturist, since the objective of the ACCFA is agricultural in nature. *+. Division Chiefs. Division chiefs take responsi bility over the various divisions in the general offices of the ACCFA. Very active is the Cooperative Division which ihas the responsibility of promoting the organization of cooperatives jand the administration of all-ACCFA loans to cooperatives. !?. The auditor. The Auditor General acts as an ex-officio Auditor in charge of the Auditing Office of the ACCFA. He appoints or removes personnel to and from the Auditing Office of the ACCFA upon the recommendation of the ACCFA*s Auditor. A quarterly report which describes the financial condition of the ACCFA is required of the ACCFA Auditor for information, and as a basis for further action by the Presi dent of the Philippines, the Secretary of Finance, the Auditor General, and the Board of Governors. The report contains a statement of resources and liabilities, includ ing earnings and expenses, amount of paid-up capital stock, surplus, reserves and profits, as well as losses, bad debts and other informative data. 6. The Central Bank of the Philippines and the Rehabilitation Finance Corporation, upon request from the I f Board, provide technical assistance needed by the ACCFA. if ________Ibid.. Section 21. p. 13.__________________________ I Recruitment of staff and personnel.J Of the total two hundred and two members of the ACCFA*s staff and per sonnel, one hundred and four are assigned in the Central Offices in Manila, while ninety-eight are engaged in actual \ Ifield work. The hiring of all these staff and field | 'workers, as well as their salaries, is undertaken and fixed by the ACCFA in accordance to provisions in the Civil Ser vice Laws of the country. The Bureau of Civil Service usually gives an examination on the field under considera tion. Appointment is based on the merit principle. Before the ACCFA appoints technical and clerical staff, selective examinations are held. In some cases, appointees serve a six-months-or-more probationary period. In 1951 +j a seminar was held to train potential applicants for the various positions in the ACCFA. Of the four thousand who applied, six hundred forty-three were selected, but only four hundred passed the competitive 6 examinations given by the Bureau of Civil Service. The group consisted of men who had special training in agricul ture, law, accounting, business, etc. ^Second Annual Report. Agricultural Credit and Cooperatives Administration Office, 1953-195** Fiscal Year (Manila: Agricultural Credit and Cooperatives Administration Office), p. 22. 6 Ibid. i : " ' I 7 1 General Powers i ~ As in any ordinary corporation, the ACCFA has its own juridical powers. They are as follows: 1. To adopt, alter, and use a corporate seal. 2. To make contracts; to incur expenses which may he deemed necessary for the efficient and effective discharging of the powers and functions vested in it. 3. To lease or own real and personal property, and to sell and dispose of the same, if necessary. To sue and he sued. 5. To submit recommendations for legislation, and to make annual reports to Congress in any matter related to the activities of the ACCFA. 6. To appoint and fix the salaries of the secretary and other experts which may be needed in the regular course of the ACCFA*s activities; to appoint and fix salaries of other officers and employees, according to the provisions in the Civil Service Law. 7« To perform all other things which may be con sidered necessary and proper for the carrying out of the functions vested in the ACCFA by Republic Act No. 821. 7 Republic Act No. 821. Section *+, p. 3. 75 a Special Powers The charter of the ACCFA authorized and directed it to discharge the following special powers for the imple- jmentation of the functions vested in it. j 1. To establish seven regional offices and such ! number of provincial, and local offices neces- | sary for the efficient conduct of its activities. The ACCFA*s principal place of business is in the City of Manila. 2. To formulate policies to facilitate extension of credits to the small farmers, and to construct facilities for the processing, storing, and marketing of their produce. 3. To approve loans according to the terms specified by the Board. The Cooperative Division takes care of this. *+. To establish and operate terminal markets or producers* exchanges and to equip all these with the necessary facilities for adequate storage to serve as clearing houses for the r cooperative associations. The ultimate goal is to make these exchanges the joint properties of the cooperative associations, in either a region or in an individual province. o Ibid., Section 5> P* 3* i j i 5. To control the issuance of warehouse receipts in ^ order to protect the lending operations of i j other lending institutions, such as the Rural l i ! Banks• i j 6. To take charge of all government activities j ? ! related to the promotion, organization, and supervision of cooperatives, especially in the educational phase of it. 9 7. To supervise MSA-PHILCUSA aid to cooperatives. 8. To encourage diversified agriculture. 10 Loaning Activities and Purposes The lending activities of the ACCFA are directed towards the following goals: 1. To stimulate the development and operation of farmers* cooperatives. 2. To minimize the laek of credit which limits the expansion of Philippine agriculture. 3. To free the farmers from the economic and social domination caused "by the unreasonable condi tions which surround his very existence, and the excessive charges imposed by money lenders, 9 'E.C.A., M.S.A., F.O.A. stand for the same organiza tion, known also as the European Cooperation Administration, later, renamed Economic Cooperation Administration: renamed ‘ Mutual Security Administration, and presently known as the Foreign Operations Administration which embodies the Ameri can Foreign Policy., PHILCUSA stands for Philippine Council for United States Aid. _______- ^Republic Act Ho. 821. Section 11. p. 7.___________ I 77 I *f. To establish a flexible agricultural credit system to permit sufficient latitude in the i operations of private financing institutions. t 1 n j Sources of Funds To enable the ACCFA to discharge its financial I ( functions effectively, a revolving fund was established j with a pledge of support by the government, as provided for in the charter. The revolving fund. A one-hundred-million-peso ($50,000,000) appropriation was authorized by Congress upon approval of Republic Act No. 821. This constituted the revolving fund. The ACCFA was authorized to: 1. Rediscount with the Central Bank of the Philip pines, the Philippine National Bank, and the Rehabilitation Finance Corporation all eligible evidences of indebtedness it has acquired in the process of carrying out its authorized functions and activities. 2. To float debentures, upon approval of the Presi dent of the Philippines, to augment said revolving fund in the event that Congress failed to make available adequate sums, provided, however, that the aggregate amounts procured from the sources above do not exceed the original authorized total of one hundred million pesos ($50»000,000) capitalization• _______1:lIbid.. Section 10. p» 7.__________________________ 78 Other sources. The President of the Philippines is empowered to allocate to the ACCFA any unexpended col lections made hy the Bureaus under the Department of Agriculture and Natural Resources, from the sale and lease of public lands, abaca inspection fees, forest charges, and others. House Bill 2kb2 provided for the gradual transfer of responsibility for the administration of funds of postal savings banks to the ACCFA. It was estimated that approximately two million pesos ($1,000,000) may reasonably be expected from this source as new lending capital each year. In addition, there are also the MSA/ PHILCUSA Grant-in-Aid and the ACCFA1s Trust Fund. Other provisions. All obligations incurred by the ACCFA are fully and unconditionally guaranteed both as to principal and interest (rate fixed by the ACCFA) by the Government of the Philippines, and such guarantee is expressed on the face thereof. All debentures, bonds, collaterals, notes or other obligations issued by the ACCFA the payment of which could not be met shall be paid by the Secretary of Finance from funds not otherwise appropriated. In this particular case, the government of the Philippines takes over all the rights of the holders of such bonds, debentures, notes, collaterals, or other obligations. All 12 Report on ”Joint Economic Development Program,1 1 The Philippines Today. Vol. I, No. 7> June, 195^? p. 21. 79 notes, debentures, and other obligations issued by the ACCFA are exempted from all taxes, both as to principal and interest, except inheritance and gift taxes. iPenal Provisions J j ---------: ------ j To safeguard the powers vested in the ACCFA for the proper and effective execution of its functions, the follow ing penal provisions were set up to avoid abuses: 1. Any Justice of the Peace or Registrar of Deeds found guilty of demanding or accepting directly or indi rectly, any gift, fee, commission, or other form of compensation for services which both are directed to perform free of charge, shall be fined with not more than a thousand pesos ($500.00) or shall be imprisoned for not more than one year, or both, at the discretion of the court. 2. Any officer or employee of the ACCFA or any government official who exercises executive or supervisory authority over the ACCFA, either directly or indirectly, who, for himself, or as representative or agent for others, allows himself to act as guarantor, indorser, or surety to secure loans from the ACCFA shall be judged as having violated this provision. Those guilty of said offense shall be removed immediately from their appointments and shall be punished by imprisonment for not less than one TO _________Republic_Act_No..__821.,_Section_2k,_p. . .13 . ___ i j 80 jyear and not more than five years, and by a fine of not less than one thousand pesos ($500.00) and not more than five thousand pesos ($2,500.00). | 3. Any officer or employee, or agent of the ACCFA |found guilty of exacting, demanding, or receiving fee for j service to help applicants obtain loans from the ACCFA shall be punished by a fine of not less than one thousand pesos ($500.00) nor more than three thousand pesos ($1,500) and imprisonment for not less than one year nor more than three years. Any member, officer, or employee of the ACCFA found guilty of speculating, directly or indirectly, in any agricultural commodity or product, or in contracts with regard to the same, or in the stock of the membership interests of any association or corporation engaged in handling, processing or disposing of any commodity or product, upon conviction thereof, may be fined for not more than twenty thousand pesos ($10,000) or imprisonment for not more than ten years, or both. 5. Any director, officer, employee, or member of any cooperative association, clearing house association, or commodity committee, or any person acting on behalf of any such association, or committee found guilty of having dis closed any information as imparted in confidence by the Board of Governors to them, shall be fined with not more 81 than ten thousand pesos ($5}0G0) or imprisoned for not more than five years, or both. 6. Lastly, any person, who, for the purpose of obtaining, renewing, or increasing a loan or extending the period of repayment of the loan in his own behalf or for |another, should give false information or cause, through j his intrigue or machination, the existence and production of any false information with regard to the identity, l i I situation, productivity, or value of the security, or with I regard to a point which would affect the granting or denial of the loan, whether the latter has been consummated or not, and every officer or employee of the ACCFA, who, through connivance or negligence, should allow by action or omission sueh false information to pass unnoticed, thereby causing damage to the ACCFA or exposing the latter to the danger of suffering such damage, shall be punished by imprisonment for not less than three months or more than three years, and fined for not less than the amount of the loan obtained or applied for, nor more than three times of sueh amount. II. THE OBJECTIVES OF THE AGRICULTURAL CREDIT AND COOPERATIVE FINANCING ADMINISTRATION The objectives of the Agricultural Credit and Cooper ative Financing Administration reflect the stated policy of 82 of the government to improve living conditions of the small farmers. First Objective^*- The first objective of the ACCFA is to grant personal loans on liberal terms to eligible small producers who are actually engaged in agriculture. The term nsmall producer” is defined as ”an individual person who uses only the labor which is available from within his own family, and who is actually engaged in agriculture.” 15 ; Loans to small farmers through the ACCFA. The productive capacity of the small farmer serves as his security for a loan, provided the amount of the loan applied for does not exceed two thousand pesos (#1,000). For the purchase of items which are not consumable, a loan is extended to the small farmer on the basis of his esti mated productive capacity after the purchase of said item, rather than upon the return in the event of forced sale of such item. Loans are extended to small farmers on the basis of their capacity to carry out or effectively utilize the funds— and to repay the loan. ll+ Republic Act No. 821. Sub-section 1, p. 1. 15 Ibid.. Section 13, p. 8. 83 Types and purposes of loans.^ Three types of loans are offered by the ACCFA, each designed to meet specific needs of the small farmer. 1. Crop or productive loans. To meet the needs of the farmer in the financing of his farm activities, he is extended a loan amounting to 60 per cent of a base value fixed in advance by the ACCFA, on the expected production capacity of the borrower. It matures in 270 days at 7 per cent per annum. 2* Farm improvement loans. A farm improvement loan is designed to help the farmer finance his purchases for work animals, farm tools and implements, including such items as fencing wire. This type of loan is extended on the same basis as the crop loans. Maturity runs from one to three years. In cases, work animals, if the reason for a loan, are mortgaged to the ACCFA as security. 3. Commodity loans. A commodity loan is designed to help the farmer sell his crop. It is extended on the strength of crops he has deposited in the cooperative ware house. The farmer gets a loan up to 80 per cent of the current value of his crop. The warehouse receipts are indorsed to the ACCFA. The loan matures in 120 days at 6 per cent interest and is renewable at the option of the ACCFA. 16 Second Annual Report. ACCFA, 195^ Fiscal Year, p. 22. 8*f 17 Terms of loans. The terms on loans made to the small farmer are adjusted to his needs and capacity to pay it hack. Some special considerations extended to him are: 1. The duration of the loan may be made consistent j with the period of time<necessary to permit the borrower toj 1 use the income he earned from his production in payment for! the loan. 2. The terms of repayment may be adjusted to the borrower’s income based on his production, and if necessarys it be amortized over a period of time to permit installment payments which are within the borrower’s income capacity. 3. The repayment period may be extended when damages or destruction beyond the control of the borrower occur, such as crop failure caused by weather, insects, diseases, and the like. 18 Security against defaults. Since terms and condi tions on loans extended to the small farmers are considered liberal, controls are necessary to prevent abuses. A short discussion on some of these security measures follow: 1. The farmer’s capacity to produce is his primary security, for a loan, and his anticipated production is pledged as security to insure against unauthorized disposi tion of the produce. In this case, the borrower may enter ^ Republic Act No. 821. Section 1*+, p. 9. l8Ibid._____________________________________________ 85 into a marketing agreement with the ACCFA covering the terms to he complied with. This includes notice to the ACCFA and also the ™ in which the produce covered in the contract may he disposed of. j 2. In the event of any breach, or threatened breach of a marketing agreement by a borrower, the ACCFA is entitled to an injunction and a decree of specific per formance. Upon filing a verified complaint showing a breach or a threatened breach, the ACCFA;. shall be entitled to issue a temporary restraining order against such borrower. The administration of the l o a n s It is through the Farmers* Cooperative Marketing Associations, called FACOMAS, that the ACCFA channels loans or credit facilities to the farmers. 20 The processing of loans. The following steps are involved in the processing of crop and farm improvement loans: 1. A standard form is used in applying for a loan, filled individually by the farmer-applicant. 2. All applications are pre-screened by a Barrio Loan Committee, composed of members, who 19 ^Second Annual Report. ACCFA. op. cit.. p. 17. PO Ibid.. pp. 17-18. generally know the farmers In their own community. The Committee submits recommenda tions to the FACOMAS as to whether the amount applied for is to be approved, reduced, or totally disapproved. Recommendations made are based on known circumstances, such as the productive ability of the applicant and his character, 3, All applications pre-screened by the Barrio Loan Committee then pass through the FACOMA Board of Directors. The latter submits a consoli dated application to a local representative of the ACCFA, who, in turn, processes the appli cations before submitting them with his recommendations to the Central Office of the ACCFA. *+. Final action on the application remains in the hands of the Board of Governors of the ACCFA. The applications are handed to this Board after the Loan Division of the ACCFA has processed them and has submitted proper recommendations. 5. Upon the approval of ths loans by the Board of Governors, separate schedules for crop and farm improvement loans are prepared by the 87 Loan Division, which shows the way and timing the loans shall be released and allocated to each individual applicant. 21 The loan schedule and the farm budget. A farm budget is required of every applicant for a crop and farm improvement loan. In this budget, the applicant states his schedule of farm operations and the amount he expects to use for each item of expenditure* The items for which a crop and farm improvement loan may be applied for are: (a) land preparation, (b) seeds, (c) pulling of seedlings, (d) transplanting, (e) fertilizers, (f) pest control, (g) family subsistence, and (h) harvesting. The ACCFA has prescribed specific amounts for each of the items above. Included in the farm budget is the amount of surplus which the applicant is ready, or expects, to pledge as deposit or security to his cooperative associa-f tion upon harvesting his crop. In this connection, a marketing agreement is signed between the borrower and his FACOMA, wherein the former pledges to deliver to the latter1s warehouse a specific quantity of his storeable produce. The quantity of commodity pledged is determined realistically and within the reach of the borrower. It Is based on his previous record of production, area cultivated, known production data in the locality. 21Ibid., p. 18. 88 On the basis of the applicants farm budget, a schedule of his loan releases is prepared according to the needs specifically stated in his farm budget. As the need arises, a part of the loan corresponding to each specified item in the farm budget is released. The length of time it takes to release a loan depends on the number of months between the time the land is prepared for planting and the time the crop is ready for harvesting. This system has its advantages. First, it enables the farmer to save on interest charges, since parts of the loan are released only upon the immediate need for it. Secondly, there is an assurance that the use of the loan shall not be diverted from the original purpose for which it was applied for. Lastly, the farmer is automatically trained on the right use of his credit line. 22 Collection. Collection is the most vital part of the lending operation. It is primarily the responsibility of the FACOMAs, since it guarantees all the loans made to its members. Educational campaigns to facilitate collection of loans are jointly undertaken by the FACOMA officials, the Loan Committees, and the ACCFA*s fieldmen, before, during, and after the harvest season. 22 Ibid.. p. 19 89 The campaigns stress on the advantages which the farmers enjoy as a result of this government assistance, and warns that these advantages may be lost if borrowers fail to repay their obligations. The farmers are reminded: 1. That they were provided a source of liberal credit at very low interest rates, neither of which they had before. 2. That their objective is to build a marketing system which they themselves can control, so that all the profits from the sale of their surplus produce may accrue to them. 3. That due to this cooperative undertaking, they can expect additional income, since ACCFA is aimed at developing a business enterprise which small farmers can rightfully claim as their own. k. That for any loss incurred due to the delinquency of one or the mismanagement of all concerned, from the officials to the members, all who have interests in the system shall suffer the consequences. 23 The rural bank loans. In addition to the loans available to the small farmers through the ACCFA, loans may also be made through rural banks. First Annual Report. Rural Banks Administration. Central Banks of the Philippines, 19I?3> p. 29* 90 For half a century, the government made many attempts to solve the almost perennial deht and credit problems of the small farmers. The results of these attempts were studied and what were believed to be effective measures j were incorporated in an Act approved on June 6, 1952, known as the Rural Credit Extension Act. This Act provided for the establishment of rural banks through which private financial assistance could be effected for the benefit of small farmers. Section 2 of said Act contained a policy declared by Congress that it would: . • . promote and expand the rural economy in an orderly and effective manner by providing the people of the rural communities with the means of facilitating and improving their productive activities. Toward this end, the Government shall encourage and assist in the establishment of a system of rural credit banks which will place within easy reach and access to people credit facilities on tolerable terms.2b It was believed that the failure of past attempts to establish a system of rural bank credit was the failure to appreciate what rural credit really involved. With the passage of the Act, it was clearly stated that rural credit would be made available to the small farmers, but on terms he could handle and for legitimate purposes only. The small farmer, in most cases, does not possess a stable income, nor properly titled lands, since many of them are tenants• ^Ibid.. "Rural Credit Extension Act," p. 3*f. 91 Loans are now given on the basis of the farmer*s character alone, whereas before, conservative banking practices required that either properly titled lands and the like be pledged as security, 25 Purposes of rural bank loans. ^ Primarily, the purpose of Rural Bank loans is to meet the normal credit requirements of the small farmers, the small merchants, and the cooperative associations of such farmers and merchants. Within the scope of the law, a small farmer is defined as an individual farmer, or a farm family, owning and culti vating (as tenant, lessee, etc.) in the aggregate not more than fifty hectares (123.50 acres) of land. A small mer chant is o ne whose capital investment does not exceed twenty-five thousand pesos ($12,500). He may be an individual, a firm, or a corporation. By normal credit is meant the requirements of eligible borrowers (small farmers and small merchants) for short-term credit (maturities not in excess of one jear) to finance their productive opera tions undertaken during the year or to meet operating expenses of annually recurring nature . . . repayable out of the results of such operations or the current income of the project which was financed. 25 ^Basic Rules and Regulations for Rural Banks, Circular No. 32, Rural Banks Act, o p . clt.. section 1, p. *+8. 92 Purposes of loans to small farmers. p Rural banks extend loans to the small farmers to help them finance operations directly related to the production or to the marketing of their agricultural produce. The money must be used: 1. To meet operational expenditures on labor, fertilizers, seed, feed, materials and sup plies utilized during the planting and the cultivation of agricultural crops and other produce. 2. To cover the cost of work animals, implements, equipment, and the like, which are necessary for farm operations; or to finance purchases of stock for breeding purposes. 3. To provide advances against harvested or stored crops or livestock, fish, and other agricul tural produce which are ready for sale to the market. b* To meet current tax payments and irrigation fees. 5. To finance minor repairs and improvements on the farm. 6. To meet reasonable farm and household expendi tures related to health, education, clothing} and subsistence of farm families during the ^Ibid., Subsection 1, Section 2, p. by. period between production and marketing of their farm produce. Types and terms of rural bank loans to small 27 farmers. There are four classes of loans extended by rural banks. They are: 1. Palav and corn loans. Palay and corn producers are extended a maximum credit loan of not more than fifty per cent of the value of their established crop production during the previous year. Additional advances may be secured up to seventy per cent of the value of the borrow er*^ current crop, either harvested or stored under the legal control of the rural bank, provided, however: f a. That the loan shall not be released in its entirety to the borrower except by successive installments as specific needs arise. b. That the release of installment payments against the approved loans maybe made either to the borrower or to his suppliers, This was provided for on the theory that the borrower is not interested in cash but in the articles essential to his productive activity. 27 Ibid.. pp. *f9-50 9^ c. That the amount of the loan shall be a lien on the crop which is the particular object of the financing; that the rural bank shall be allowed to demand, in addi tion, other real or fiduciary guarantees which it may deem necessary to bolster the borrower’s ability to repay the loan he acquired. 2 . Perishable crops. Extreme caution is exercised by the rural banks in the extension of loans on agricultural products which are perishable in character, such as fruits and vegetables. In such cases, not more than 30 per cent of the value of the borrower’s crop production of the previous year may be allowed. Additional advances, however, may be acquired up to *f0 per cent of the value of the borrower’s current crop already harvested and ready for the market, provided the maturity of such loan does not exceed one month, with a maximum renewal of another month. 3. Livestock and fish. Loans for breeding livestock: and fish shall not exceed *+0 per cent of the value of the stock at the time the loan is closed. Additional advances may be secured as the commercial value of the stock ready for the market increases to 60 per cent. *+• Other agricultural products. The maximum credit that may be allowed to agricultural crops, the prices of which are not supported or stabilized by government agency 95 such as the NARIC (National Rice Corporation), shall not be more than *+0 per cent of the value of the borrower’s crop production of the previous year. Additional advances up to 60 per cent of the value of the borrower’s current crop may be allowed against his visible crop either harvested or stored under effective control of the rural bank. pQ Interest rates. The rate of interest shall not be more than 12 per cent per annum, or 1 per cent per month, unless a lower rate is prescribed by the Monetary Board. Interest shall be computed on the basis of 365 days for normal years and 366 days for leap years. The rural bank, however, may fix preferential rates of interest in order to encourage the development of certain types of production to achieve a balanced and progressive rural economy. 29 Second Objective The second big objective of the ACCFA is to promote the effective groupings of farmers into a system of producer-owned and producer-controlled cooperative associa tions for greater unity of effort in the productive processing, storage, and marketing of agricultural produce; to minimize speculation; to prevent inefficient and wasteful ^Ibid.. Section 1, p. *+9* 29 Republic Act No. 821. Section 1. __ 96 methods of distribution; and to preserve and keep the profits of agriculture for the farmers through the medium of cooperation. The Farmers* Cooperative Marketing Associations or FaCoMas.^0 A FaCoMa is a business enterprise that operates on the basis of the cooperative principles of one-man-one- vote, limited interest on capital, and distribution of savings in the form of patronage dividends. The aims and purposes of said associations are defined clearly in Section 1 of Act No. 3^25, known as the Cooperative Marketing Law, | which was enacted by the Philippine Legislature on December 9, 1927. The law stated that: Every association incorporated underthis law shall be operated primarily for the mutual benefit of the members thereof, as producers, and should aim to pro mote, foster, and encourage the intelligent and orderly marketing of agricultural products through cooperation; to make the distribution of agricultural products between the producer and the consumer as direct as can be efficiently done; to stabilize the marketing of agricultural products. 31 1. Who mav organize. As specified in the law, a group of fifteen or more persons who are citizens of the Philippines and residents thereof, may organize themselves into a cooperative marketing association. Whereas before, as provided in Commonwealth Act No. 565} citizens of the Second Annual Report. ACCFA, op. cit., p. 13* ■^"Laws and Legal Opinions on Cooperatives,1 1 Hand book on Cooperatives, o p . cit.. p. 163. j 97 United States of America and residents thereof were extended privileges and rights to he members of a cooperative in the Philippines, Republic Act No. 76 repealed all laws or provisions of existing statutes to that effect, unless they affect rights already vested under the provisions of the Constitution, or unless extended by any treaty, agreement or convention between the Republic of the Philippines and the United States of America. A cooperative marketing association may be formed with or without capital stock. However, it is the policy of the ACCFA to encourage the formation of stock coopera tives. The membership is open to small farmers, tenants, big landowners, lessees and administrators. It is required of every member to subscribe and pay for at least a share. The minimum authorized capitalization is fifty thousand pesos ($25,000) with a paid-up capital of two thousand pesos ($1,000). Popularly accepted par value of a share of stock is five pesos ($2.50), but ten pesos ($5.00) is fast gaining acceptance among the new cooperatives. As a matter of policy, the ACCFA requires a FaCoMa to have at least two hundred members.-* To assure every FaCoMa an adequate volume of business, only one cooperative is allowed in every town. The farmers of neighboring towns can join a FaCoMa of another town until such time when the 32 Second Annual Report, ACCFA, loc. cit. 98 organization of another FaCoMa in their own town becomes justified. Non-agriculturists are allowed to join a FaCoMa, but they can hold preferred stocks only with interest limited to 10 per cent per annum. They are not allowed patronage dividends. 33 is* Voting power of members. A member of a cooperative association is entitled to only one vote regard less of the number of shares he owns. A cooperative association, may, in its by-laws, allow a member, after a year*s participation, a certain number of \otes in propor tion to the quantity of agricultural products he had delivered to his FaCoMa. Members holding preferred stocks have no voting power. 3,. Patronage dividends.- The net profits of an association, over and above expenses and dividends of membership capital are distributed as patronage dividends among the holders of common stock. Patronage dividends are apportioned according to the volume of agricultural products sold through or to the association by a member within a specific period of time. No association organized under Act No. 3^2? is allowed to pay dividends in excess of 8 per ^"Laws and Legal Opinions, . . loc. cit. 3*h, Ibid. cent per annum on membership capital and common stock, and 10 per cent per annum on preferred stock. 35 Functional structure of a FaCoMa. A FaCoMa has a board of directors, staff, and committees, which carry the responsibility of guiding its operations and activities. !• The board of directors. A boardscomposed of seven, nine, or eleven members elected annually by the entire membership is the policy-making body of a FaCoMa. By practice, the directors are elected on the basis of barrio representations; that is, cooperative members in one or several adjacent barrios or towns may elect a director to represent them. When and if there are less barrios than members of a board, directors at large are elected. The members of the board elect the president, the vice-president, the secretary, and the treasurer. Also, the board appoints a manager and other employees. The members of the board receive no compensation of any form, but in some cases, nominal per diems are given to them as an incentive to assure their attendance at every board meeting. The treasurer is bonded for five thousand pesos ($>2,500) and the FaCoMa pays for the premium on this bond. 2. The manager and the personnel. A full-time manager and his assistants carry out the daily business activities of the FaCoMa. — _______-'•'Second Annual Report. ACCFA. o p . cit.T p. 13._____ 100 Usually, a FaCoMa does not employ many personnel unless the volume of business justifies this. A full-time or part-time bookkeeper is required of every FaCoMa. The manager is bonded for five thousand pesos ($2,500), and the FaCoMa carries the premium on it. Generally, the manager receives no compensation until such time when the associa tion is able to pay him out of its own income. However, the FaCoMa pays for his traveling expenditures. 3.. Members1 committees. The various committees which take charge of the activities of the FaCoMa, are the i Membership, Projects, Education, and Increased Production. The Committee chairmanships are divided among the members of the board with the assistance of the FaCoMa members. A barrio Loan Committee is required of every barrio where there are FaCoMa members. It consists of three members elected by the local farmers affiliated with the FaCoMa, and performs the function of screening applicants for membership and for applications for loan within its jurisdiction. The Committee^ certification is required on all membership and loan applications, based on the charac ter and reputation of the applicant. The Committee also assists in loan collections. The Committee members do not receive any compensation whatsoever. j 101 I •JA I Operation of the FaCoMas. The FaCoMa is concerned (primarily with the organization of its own operations, the |administration of its credit line obtained through the IACCFA, the collection of matured loans, and other related |services. I One of its goals is the establishment and operation of a warehouse of its own for the use of its members. Organization of FaCoMasA certain amount of preparatory work is undertaken before a FaCoMa is organized and this includes the following: 1. Economic survey. The general situation in a locality is first studied to determine the need for organiz ing a FaCoMa. The factors considered are: the agricultural area, the products being raised, the production output of the area, the farming methods in use, the tenure conditions, the marketing practices in the locality. ' v 2. Education. The ACCFA fieldmen call group meet ings to explain to the people fundamental cooperative principles and the program of the ACCFA, the procedures followed in organizing a cooperative, who may be members, etc. Interest of the people is first aroused before the organization of a FaCoMa is started. 36Ibid.. p. lb 37Ibid. University of Ceuthern-California Library 102 j I 3.* Election of a provisional committee. To i facilitate the formal organization of a FaCoMa, a temporary committee is formed to process all applications for member- - I ship, to receive and record stock subscriptions, pledged |and fully paid for, to prepare the organization and the 1 |incorporation papers, as well as the by-laws. It* Election of officers. After a sufficient number of qualified members has been secured according to law, and the incorporation papers and by-laws have been adopted, an election of the members of the Board of Directors and the Barrio Loan Committee is held. The members of the Board ®lect the officers. j?. Registration and affiliation. According to law, only upon registration with the Securities and Exchange Commission may a FaCoMa legally operate, or legally be affiliated within the scope and jurisdiction of the ACCFA. Only those affiliated with the ACCFA are entitled to the credit privileges open to agricultural cooperatives and their members. op Capitalization of FaCoMas. The ultimate objective is to develop the FaCoMas into self-sustaining associations into producer-owned and controlled associations. Since potential members of the FaCoMas are small farmers, very _______38Ibid., p. l*f._____________________________________ 103 little capital is available. The small farmers in most cases are poor and have very little or no capital at all. To build and safeguard the capitalization of a FaCoMa, the ACCFA adopted the following measures: 1. Cooperative budgeting. The FaCoMas are required to submit their proposed annual budgets in advance for the analysis and approval of the ACCFA. In addition, a monthly statement of income and expenditures is also required, a measure believed to be effective in preventing the uneconomical use of funds. The operations of the FaCoMa are systematically planned and the employment of capital carefully prepared to properly guide the spending of available funds. Expendi tures are expected as much as possible to be paid from the income of the FaCoMa. 2. Share in interest on loans. On all loans given out by the ACCFA through the FaCoMa, the latter is allowed to collect a surcharge or service fee of not more than 5 per cent to help defray the cost of its operations, with the exception of commodity loans where only 2 per cent interest is charged. 3>. Forced stock subscriptions. Five per cent of all crop, production, or farmloan is withheld as a security against delinquencies. Upon the 100 per cent repayment of 10b all loans the total amount of withheld percentage is concerted by the ACCFA into additional stock subscriptions j for the members from whose loans, said percentage was j ideducted. I ! i ! ! 4. Regular fund sources. Regular funds come from i the membership fees and subscriptions, as well as from the income of the FaCoMa in its business operations. Other sources. Some FaCoMas induce their mem bers to deposit additional shares into the capital stock which may be in the form of a sack of rice grains, and the like, other than money. 39 Federation of FaCoMas. The plans of the ACCFA include the organization of all local FaCoMas into provin cial federations, later to be grouped into one national federation of FaCoMas. Actual organization towards the realization of this national plan already started in the provinces of Bulakan, Pampanga, Tarlac, Pangasinan, Cagayan, Isabela, and Iloilo. 4 - 0 Third Objective The third objective of the ACCFA is to promote the establishment of facilities required for the orderly and 39Ibid.. p. 15. ^Republic Act No. 821, loc. cit. efficient processing, production, and marketing of farm products "by the cooperative associations and its members, as well as to extend other essential and related services Ifor the improvement of rural living. This is undertaken I through the following: | i+1 i Loans to cooperatives. Government assistance, financial and otherwise, for the realization of the objec tive stated above, is carried through the cooperatives. Loans are released to and for the benefit of cooperatives. However, the cooperative applying for a loan is required to have an organization, management and business policies to serve as security for the reasonable safety of loans extended to them. Proper registration with the Securities and Exchange Commission is also required. 1. Facility loans. The ACCFA extends facility loans to the FaCoMas to enable them to construct or acquire by purchase, facilities such as warehouses, rice mills, transportation, and other essential equipment for the storage, processing and marketing of the produce of their members. Facility loans may be granted to any FaCoMa in an amount equivalent to 100 per cent of the value of the faci lities to be constructed or purchased, provided, that said facilities meet the following requirements: IflIbid. ._Sectipn„l£j_p.„10._________________________ a. All major parts must be completely made up of steel or concrete materials. b. That In ten annual amortizations, the total amount of the loan be paid in full. Limitations on facility loans. In addition to the requirements listed above, several limitations were also Imposed: a. If a loan for the avowed purpose fails to meet the requirements called for, the total amount which may be granted shall not exceed 80 per cent of the value of the facilities to be constructed or purchased. b. No loan may be granted to any cooperative association unless the board of directors of the association had first determined the reasonableness of the purchase price. c. Ho loan may be granted to any cooperative association unless the board of directors had first established the fact that there are no available and suitable existing facilities which can furnish them services at reasonable rates, or are for sale at prices reasonable. 107! ko 3,. Interest on loans to cooperatives. Interest on loans to cooperatives shall not exceed 8 per cent pet i annum. Loans to cooperatives are released upon compliance i | of requirements stated above, and upon such other terms not i inconsistent to the same, and upon such security require- , i ments which the Board of Governors may deem necessary. j I Loans on cooperatives are subject t© 5 per cent insurance fee payable at the time the loan is released. | The total of this, after a specific period of time is ! reverted to the cooperative association on whose benefit the loan was granted, after said loan has been paid back in full. 1+3 Rural Bank Loans to Cooperatives. Rural Bank loans to cooperatives are extended on the following basis: i 1. Tbst it shall be used to assist the member ! i i farmers to finance production, storage, and marketing of I thier produce. 2. That applications for such loan fall within the classification of borrowers as defined within the scope of the Rural Credit Extension Act. 1*2 Ibid.. Section 16, P. 11. •'Basic Rules and Regulations for Rural Banks • op. cit.. Subsection lv, p. 51. III. THE FIVE-YEAR DEVELOPMENT PROGRAM OF THE AGRICULTURAL CREDIT AND COOPERATIVE FINANCING ADMINISTRATION FOR COOPERATIVES AND CREDIT FINANCING ■ A five-year program of oooperative development and credit financing was adopted by the Magsaysay administration which started operation during the fiscal year, 195**~1955. The program is flexible in nature, to allow adjustments at ithe end of every fiscal year, to meet changes in the I conditions and circumstances prevailing in each year. j I 1 Mi i Goals of the Program ' ! Listed as goals of the five-year development programj of the ACCFA are: ' 1. The installation and development of 1,000 far- | mer*s cooperative associations with 1,600,000 farm families! as members• ! 2. To finance systematically these cooperatives and their members to enable them within five years to meet part of their credit and capital needs at current production levels• | Luciano A. Sladino,” ACCFA Completes Three Years of Public Service,'* Special Features Bulletin, Philippines j Herald. September 9* 1955* j ! j 3. To install and operate warehouses, storage and processing facilities for each of the 1,000 FaCoMas to make i I possible for them to handle with maximum efficiency the j marketing of the surplus produce of the members* j | *f. To influence the control of distribution of j I staple crops, including rice, and other principal crops and to transfer the same to the cooperatives owned and controlled by the producers themselves in the areas where these cooperatives are located* 5* To Increase the productive output and average income of the 1,600,000 farm families* 6* To plan an educational program for the training of potential leaders who will lead in the active practice and application of the cooperative enterprise with the hope that the cooperative way may become a permanent aspect in i the nation's economic and social life* ! k*f ; The Loaning Program y i Adequate planning in the implementation of the pro gram is needed to insure its success. The loaning program ! I I was divided into two groups: ! The primary group * The primary group consists of one hundred cooperatives and fifty thousand farmer members* Second Annual Report, ACCFA* o p * cit*. p. 27* 110 |On the first year of the actual operation of the five-year t program, the primary group was given the full assistance of the ACCFA, which included production or crop loan, farm improvement loan, commodity loan, and facility loan. I | The secondary group. The secondary group consists i of fifty cooperatives and twenty-five thousand farmer mem- ibers. After the first-year operation of the program, a secondary group will receive partial assistance from the ACCFA every year, until the last year of the five-year period. Partial assistance includes all types of loans with the exception of the production or crop loan. The Warehousing Program For the fiscal year, 195^-1955, ninety-five units for facility purposes with a total capacity of 3♦5^+0,000 cavans (**,061,280,000 pounds) of palay were scheduled for construction. Below is a list of the provinces with the number of warehouses to be constructed in each of them: Bohol •••••••. Cagavan ...... 7 Leyte ........... Masbate. • • 1 nes Rur*. ..... 5 Mt• Province........ 1 Capiz......... Cotabato..... Davao......... Negros Occidental. Nueva Ecija..... Nueva Viscava....• .. 3 Iloilo »«..«««« ..... b Palawan .. 1 Iloeos Sup.■••..... 2 Panina n ps b Isabela.•••••• Panpaslnan ..12 laguna ...... 3 Bisal • • 2 la Onion...... Tarlac•••••••••••• kg Ibid.. p. 28. i iSources of Funds for the Program The revolving fund. The ACCFA has a total revolving fond of 100 million pesos ($50,000,000). The capital outlqr 1. Six million pesos ($3,000,000) for crop loans i i secured from congressional appropriations. 2. Three million pesos ($1,500,000) for farm |Improvement loans, secured from the same source. | 3. Four million pesos ($2,000,000) for facility loans, secured from the PHILSUSA-FOA joint-aid program and , from the Rehabilitation Finance Corporation. j *+. Eighteen million pesos ($9,000,000) for commo- dity loans, secured from the Philippines National Bank and other private hanks. i f Other provisions. The charter of the ACCFA provided for full government support of all obligations the ACCFA * may incur in the faithful discharge of its functions, duties, and responsibilities. Comparative Reports on ACCFA»s Progress Initial operation. From the Cooperatives Administra- i tlon Office, twenty-two FaCoMas were transferred to the The Phi______________ of the ACCFA for 195** showed the following amounts and sources: ^Ibld.. p. 29. Report on ’ ’ Joint Economic Development Program jACCFA by virtue ©f Republic Act No. 821. With twenty-two IFaCoMas and a total membership of 6,6*t3 individual farmers, l^Q the AGCFA started its actual operation in June of 1953* The twenty-two FaCoMas had a combined authorized capitaliza tion of PI,305,000.00 ($652,500.00), of which P8l,168.00 ($*O,58*f.00) was paid up. These twenty-two FaCoMas were spread out in one hundred and ten barrios in twenty-one municipalities, covering ten provinces and one chartered city. By the end of June 30, 195*+, the total number of FaCoMas registered with the Securities and Exchange Commis sion jumped from twenty-two to one hundred and sixty, covering 1,610 barrios in 159 municipalities in twenty- eight provinces and one chartered city. The total membership increased to 55,68? farmers and their combined jauthorized capital Increased to a total of P7,813, **25.00 ($3,906,712.00) with a paid-up capital of P6ll f,222.00 Second year. In the year following, from June 30, 51 195^ to June 30, 1955, the total number of FaCoMas registered with the Securities and Exchange Commission if9 Second Annual Report. ACCFA. loc. cit. 'Ibid.. p. 12. ^Luciano A. Saladimo, loc. cit. iincreased to 296; total membership increased to 135,1 *60 individual farmers in 5*393 barrios covering forty-two provinces. The combined authorized capital amounted to a total of ?17,588,*K15.00 (#8,79**, 207* 50) of which ?2,088,568.13 (#1,OM*,28*f.00) was paid up. Third year. Most recent report at the time of this writing was a record of the first month operation of the 52 ACCFA for the fiscal year 1955-1956, which showed a total of 319 FaCoMas registered with the Securities and Exchange Commission. Aside from the increase in the total number of FaCoMas, the membership also increased to 188,000. The loaning activities of the ACCFA showed marked ! increases also: from ?2?7,6Mi.95 ($138,882.>+7) in 1953 to **+6,253,536.86 ($23,126,868.*+3) in 1955, to a total of 757,829,820.00 ($28,91^,910.00) during the first month of i Favorable reports regarding cooperatives seem to ! Justify what Pope Pius XII said, "Cooperation is the open sesame to an abundant life." 5*t T. Vicencio, "Democratic Upheaval in the Rural Areas," Manila Times. January 27, 195b* ^3Ibld. ^ Ibld.. citing Pope Pius XII. IV* SUMMARY 11^ In the chapters before this, there seemed to be no j | really organized program for the improvement of the welfare j of the small farmers* The small farmers seemed to have made little, if any, progress at all, so that, according to Bernstein, "they have been forced for generations to live in a state of chronic misery, and no basic progress have been made*" But a careful study of the operations of the ACGFA and its organization, shows that real progress and organized reform have finally taken place* The problems have been directly dealt with. In the past, credit facili ties were offered to the small farmers, but beeause of his inability to meet security requirements, his credit difficulties had never been met* Careful and adequate planning have gone into the organizational structure and implementation of the objec- I tives of the ACCFA. The ACCFA is concrete evidence that the Administration of President Magsaysay is directed towards the welfare of the country's poor in the rural areas* Every effort is being directed to help the small farmers raise more crops and earn more income* The five-year development program for cooperatives under the ACCFA alms to develop one thousand farmers* Bernstein, op* clt** p. 22* cooperatives on a self-sufficient basis; to provide storage and processing facilities for these cooperatives; to gra dually transfer the distribution of rice and other staple j crops to cooperatives controlled by the producers themselves; i to increase the productivity of the 1,600,000 farmers; and lastly, to train the leaders in cooperative enterprise with the ultimate goal of leaking the cooperative system a permanent aspect of the nation*s social and economic life. But other problems have to be solved In addition to the credit and marketing needs of the small farmers. There i I is the problem of tenancy relationship. The small farmer i i also needs technical ' ’ know-how.” He has to learn to adjust his mode of living to the economic progress he makes. Cooperatives alone will not solve the over-all social and economic problems of the country. CHAPTER VI 1 OTHER MEASURES UNDERTAKEN BY THE GOVERNMENT It is Believed that even the well-planned ACCFA ean ; i not carry alone the whole responsibility of improving the condition of the Filipino subsistence farmer. i Other measures are needed, to meet problems in the ! j relationship between tenants and landlords; the landless are demanding for land; modern technical know-how is needed to replace the old and antiquated methods; agricultural extension service should be made more available; and most important, the recipient masses should be made fully aware of their participation in this national struggle to improve their condition for their own welfare. To quote President Magsaysay in his program for progress: 1 We shall lay out a well-organized network of agricul tural extension service to teach our rural population ; improved methods that will enable them to draw the most out of the land. . . . It is our plan to provide under j government auspices certain public service projects, such as irrigation and electrification, in order to expand agricultural production; to Increase the supply i and use of fertilizer, modern agricultural implements and high yielding varieties, in order to augment the yield of the land under cultivation; to construct farm- to market roads in order to provide outlets for the farmers9 produce; to develop and expand cottage indus tries in order to create work opportunities for the unemployed and underemployed rural population* . . . Our tenants must be assured a fair return for their labors. . . . Provisions will made to enable our landless to aequire land of their own on settlement ! 11?'j projects, and efforts will be exerted to purchase big | landed estates for distribution to their occupants on ; realistically liberal terms.1 I. COMBATTING THE TENANCY PROBLEM Tenancy has been the curse of the Philippines for hundreds of years, and it has repeatedly eaused unrest in the country. On occasions, violence has entered relation ships between the landlords and the tenants. Historical background. Three heads of State have exerted their utmost efforts to improve the landlord- tenant relationship. President Manuel L, Quezon first attempted to wipe out the roots of feudalism in the country, j During his Incumbency, Commonwealth Act No, bOfk was enacted which expressedly acknowledged the farmer to be an ; equal partner In the landlord-tenant relationship. This ! i 2 iAct gave the tenant a security of tenure in his holdings. President Manuel A, Roxas, after his inauguration as: t the first President of the new Philippine Republic, imme- j i diately recommended the passage of Republic Act No. 3*+, an j amendment to Commonwealth Act No, hojh-, which provided for ! 1 ' "Program for Progress,1 1 Speech delivered by Presi- 1 dent Ramon Magsaysay at the Far Eastern University. March 20, 1953* Reprinted by the National Media Production Center, Manila. 2 Deograclos E. Lerma, "Our New Agricultural Tenancy Act,” Progress f5*+, Times-Mirror Annual Report. Manila, 195*»> P. 101 *. _____ ja maximum share of 70 per cent ©f the harvest for tenants 1 i ' on first class land, and 75 per cent for tenants on second " ■ a class land* Last of the three heads of State to take interest in! j this particular problem is President Bamon Magsaysay, | incumbent at the time of this writing* His administration j i is in a large measure, concerned with the many problems of i the small farmer, and this found fruition in the Agricul- j tural Tenancy Act of the Philippines, passed on August 30, j The Agricultural Tenancy Act. The purpose of the Tenancy Act is contained in Section 2: It is the purpose of the Act to establish agricul tural tenancy relations between the landholders and ! 1 tenants upon the principle of social justice, to afford1 adequate protection to the rights of both tenants and landholders; to insure an equitable division of the produee and income derived from the land; to provide tenant-farmers with incentives to greater and more efficient agricultural production; to bolster their i economic position and to encourage their participation in the development of peaceful, vigorous, and democratic rural communities •*+ 5 Advantages of the Tenancy Act* Whereas there were j I vague provisions in Act *+- 05* *-, the new law as amended, was a 3Ibid. U . ^Republic Act No. 1199* "The Agricultural Tenancy Act of the Philippines,* * Manila: Bureau of Printing. 5 Ibid. 119! move to correct such defects. The advantages of the new | Tenancy Act over Commonwealth Act No. *f05H- are: 1. Tenancy contracts and tenancy relations were | i elearly defined for the benefit of both the tenant and the | i landlord; the terms of a contract may be changed or totally’ extinguished from year to year; or by stipulation as agreed; upon by both parties; the tenancy relationship between the ' parties In contract may subsist, and the tenant may be subjected to ejection by the landlord upon proof of a just cause against the former by the latter. 2. The accounting procedure to be adopted was spe cifically provided for, in that final accounting must take I place ten days after threshing or harvesting, or within j I five days, If the crop was to be sold In processed form; ; that accounting of the business transactions should be ; t written In a language or dialect known to the tenant, and signed by two witnesses. i j 3. Commonwealth Act No. kOjh exempted the tenant from paying or sharing in thepayment of taxes to the l Government; the new law extended the effect of such provi- i slon to exempt the tenant from paying rent or cannon for the use of the land. b. The allotment for the dwelling place of the tenant was fixed at not less than 1,000 square meters. 5. The rate of interest on loans was reduced to 8 per cent and 10 per cent respectively, from 10 and 12 per ' 120 | l cent, as provided for in the old law. | i 6. While the old law gave the landholder a prefer ential lien over 85 per cent of the share of the tenant, the new law eliminated said lien; it further provided that ; 25 per cent of the harvest, plus the carahao (water buffaloj | and one of every farm implement held by the tenant (provided all these do not exceed five hundred pesos ($250.00) shall | i be exempted from attachment• I ?. The new law clearly defined the relationship | between the tenant and the landholder, in that tenancy i relationship may be established by contract, which may be ' in writing, verbally expressed, or implied; that once said relationship has been established, the tenant must be j i entitled to a security of tenure in his holdings. | 8. The new law provided for a legal defense counsel! I for the tenant In the event of court litigations. Past experiences showed that the tenant lost his case, not because he was unjustified in his claims, but because he j ; i was financially handicapped to pay for the services of a ! ! lawyer. I i 9* The new Act enjoined the Courts and the adminis trative officials to resolve all doubts in favor of the tenant in their interpretation of the new law. 6 ' The Agricultural Tenancy nQiamlgslQn.v Administrative^ Order No* 67, dated September 30, 195*+, created the Agri cultural Tenancy Commission to take on the responsibility of implementing the application of the new law on tenancy relationship* j The Commission is composed of a chairman and two members* It is under the joint supervision of the Depart ment of Justice and the Department of Agriculture and Natural Besources* Three of its important divisions are the Mediation Division, the Technical Division, and the Informative Division. Their functions are: 1* To mediate in the disputes between the land holder and the tenant* 2. To screen all complaints which are in violation of the new law* 3* To inspect agricultural lands and t© certify to 1 the Courts their suitability for mechanized farming. 1 b, To conduct programs which shall acquaint the landholders and the tenants with the provisions of the new law. i 5. fo conduct surveys and research to determine the extent of compliance, or the effectiveness of the new law on both parties concerned* Deogracias 1. Lerma, citing the Administrative Order No. 67* dated September 30, 195^> SE* cit.. p. 105* 6. To help expedite the preparation and registration! ! of landowne r-and-tenant contracts through the distribution ! of printed forms and instructions to serve as guide. j 7. To prepare an annual report for the perusal of j I i the President of the Philippines, showing the progress or j I i failings of the new law, and in connection with the latter, to submit recommendations to correct its flaws. II. LAND POE THE LANDLESS j Another direct remedy to the tenancy problem of the j country is the new policy of the Government to give land to ! I the landless. To accomplish this objective, the Government! i put up the National Eesettlement and Rehabilitation Adminisj- tration, known in short as the NABEA. j ! i j The National Resettlement and Rehabilitation Adminis- tration--Its functions.^ Through the NARRA, land is given | free to qualified settlers by the Government. The charter of the NARRA contains the following functions: i 1. The acquisition, by grant, of unrestricted areas |of public agricultural lands, or by purchase of big landed estates for survey and subdivision of such lands for farm- , ing, homesites, roads, parks, and community centers for land settlement areas. I i ^Anatolio Lltonjua, **A New Program of Land Resettle-! ment, ” Progress * 5 * * , Times-Mlrror Annual Renort. Manila, j 195^, P. 9*. ' 123 ' 2. The distribution, disposition, and granting of titles for home and farm lots to qualified persons* 3* The transportation of the applicant settler and : his family to the resettlement area. k* The provision to the settler of Initial assis- tance until such time when he could reasonably stand on his own. ! g 1 Qualifications for settlers. Applicants for land benefit through the NARRA should have the following ! < qualifications: ! | 1. He must now own a homestead, or have any land j I I i , with an area of five hectares (12.35 acres) or more at the time he files his application. ■ 2. He must be capable of discharging his responsi- ; bilities as a settler, to avoid parasitism. | i 3. The land allotted him should be operated on a j I I family basis• ! b. A former Hukbulahap may apply for land grant to |the condition that he first surrenders himself to the j 1 i | government with a pledge that he shall return to the life | of a law-abiding citizen. | 8 < Xbid• , p. 95* 12*f I Government incentives to encourage progress In the j settlement areas.^ Although land is given free to the i j settlers, they are expected to work for their own liveli- i hood* However, seeing the need for initial assistance to i help the settlers get started, the government is offering ! the following aids: 1. The cost of transporting the settlers and their ifamilies to the settlement areas. i 2* Funds to construct their houses. 3. Initial assistance for the subsistence of their families during period of preparationcf the land for plant ing; food is rationed by the government. *f. A carabao and other necessary farm implement are i given to each settler. 5. Seeds and seedlings. j i I I 6. Cost of clearing the land. A NARRA tractor is I i i 1 -available for the use of all. All these are chargeable to the account of the l 1 settler with the exception of the land, payable from the third year of his stay in the settlement, within which, it i i is believed, his farm begins to produce. 9 Oiaf Giron, ”WAO Has the Answer,” The Saturday Herald Magazine. March 10, 1956., p. 3* 1251 1G ' Government agencies cooperating with the NARRA. | jAll possible means and assistance are provided for by the government to help build a healthy and decent community life in the settlements, including the cooperation of the j following agencies; 1. cooperatives are being organized. The farm I (yields of the settlers are handled by FaCoMas which also j ! I extends loans to the settlers on the strength of their j 1 ; I (carabaos, farm equipment and their produce. A first lien ( on their farm lots and home lots also serves as security. i 2. The Bureau of Lands lends its assistance in the j speedy subdivision and surveying of the farm and home lots i as well as in the expedient processing and issuance of land titles to the settlers. 3. The Bureau of Soil Conservation analyzes the soil in the proposed area reservations and does research on how ' to improve or conserve its fertility. The Bureau of Agricultural Extension offers technical ‘ ‘ know-how'* in Improving farm management. 5. The Bureau of Public Works cooperates in the construction of roads which lead to the settlements. j 6. The Bureau of Health, particularly the Health i i Extension Units, are extending invaluable assistance in caring for the health problems of the settlers. 10Litonjua, loc. cit. 126 7. For healthful environment, a community center with a library, sohoolhouse for gradeschool children, plaza site for recreation, playground for the children, and the like, are being built. Contrary to the belief of many that the NARRA will fail in its function of purchasing big landed estates for resale and distribution to tenants (due to expected opposi tion from the owners), the landowners themselves, in cooperation with the government's program, have offered their land for the purpose cited. ”No country in the world j can show such progress in its land reform program for the i past ten years,* * said James P. Emerson, an official of the International Cooperation Administration, ”as the Philipp pines has made during the last two years*”11 III. BUREAU OF AGRICULTURAL EXTENSION The Bureau of Agricultural Extension, together with the Office of Agricultural Information and the Division of Agricultural Economics, and other agencies, is engaged in the dissemination of results of research to farmers and agricultural workers. This Bureau is concentrating its efforts to the improvement of the home and farm life of the small farmers. ll”News from the Philippines,” The Division of Inter national Information, Department of Foreign Affairs, Manila,! Philippines (Mimeographed weekly publication), October 10, i 1955.______________________________________________________i The five-point program of the Bureau covers the followings 1. Food production ' 2. Health and sanitation 3. Home management and beautification j *+. Clothing needs ‘ ! 5. Citizenship training | The farmer and his family are taught how to use j improved production methods; they are encouraged to achieve self-sufficiency in the raising of various food crops and ; ilivestock even on a small scale for their own use. In an effort to intensify the program for rural I i !improvement, the Bureau organized the following: (a) *+-H j Clubs for the youth; (b) Rural Improvement Clubs for the j women; (e) Barrio councils for the training of the barrio people in self-government. i 13 ! The ^-H Clubs. The *+-H Clubs are designed to \ train the farm boys and girls in the proper use of their i i time, talents, and energy, with the view of teaching them ! ! to appreciate the dignity of labor. The four "H*s" repre- ! sent equal training of the head, the heart, the hands, and lastly, the health of a person for better citizenry. 12 i Cayetan© C. Pineda, "Agricultural Extension Work," Philippine Yearbook of Commerce and Industry. Manila, 19$ $ , p. 96. I 13 I P. 97. i Training is gained by actual participation in the farm and home activities. The youth learns his responsi bilities as a member of the community. The boys and girls ! ! ' |conduct together their group discussions; they decide which: I ! project or projects to undertake; they think of ways to ; develop interest within the group. t The elder people are encouraged to participate in | t the *+-H Club activities. The Municipal Agriculturist and Home Demonstrators organize meetings where parents and com munity leaders seek ways and means to be of assistance to their children. The barrio school teacher plays a major part in molding the citizenry of the community. Ilf The Rural Improvement Clubs. The Rural Improvement Clubs are voluntary organizations and are open for member ship to all adult women of the community. The objective is I ( to bring about desirable and constructive social changes in; the family and in the community life. The women in the Philippines hold a very influential position in the affairs of the family. The wife enjoy the highest position in the family circle, and her husband addresses her “maybahay” 1K which means "owner of my house .M Her influence ranges i t 1* f!bid.. p. 97. it i ?Helen M. Abrahamsen, The Philippine Islands (Palo ! Alto, California: Pacific Books, 1953), P* I1 *. Ifrom the right to name each new-horn babe, to the management i jof the family funds, being first teacher to her children, Jin addition to being a wife and companion to her husband. The activities, therefore, of these Clubs are directed i towards the re-awakening of the barrio women, to make them \ | realize their important role in the improvement of their i i I 'own family life, as well as the life of the whole communityJ t ! The Barrio Council. Republic Act Mo. 1**08 authorizes; i the organization of Barrio Councils in the towns and in the i ; provinces in the Philippines to give the barrio people a i I ! strong and united representation in matters which they may ! I 16 I wish to bring to the attention of their government. The j Council is operated on a self-help system, on the theory that once interest is aroused, the barrio people will take upon themselves to deliberate, plan, and implement their j own improvement program. i A barrio council its composed of a barrio lieutenant,! who acts as chairman, and such number of vice-barrio lieutenants as there are sltios within a barrio: a council-! man for health programs; a councilman for educational programs; and a councilman for problems of livelihood. Half of the voters present in an election can decide whether — Republic Act Ho. I*f08, "An Act Providing for the Establishment of Barrio Councils," Philippines (Manila: Bureau of Printing.) 130 j voting should he open or secret. It is hoped that actual participation of the harrio people in the affairs of their community will make them realize their responsibilities in the improvement program directed towards their own welfare• | Prom the time, barrio councils first appeared j through the first six months of 1956, records showed that a total of 2,600 councils have been organized and are 17 functioning. ' However, "if barrio councils are to have a sustained interest and active support of the barrio people,' warned Dr. Robert T. McMillan, who is Social Science Adviser of the U. S. Operations Mission to the Philippines, “they must be provided with funds or material resources to 18 carry out their function, as well as technical help." i IV. THE PHILIPPINE COUNCIL FOR UNITED STATES AID THE FOREIGN OPERATION AEMINISTRATION JOINT- AID PROGRAM : ! j Economic unrest over the world gave birth to a i global American foreign-aid plan, contained in the Truman i j Doetrine and in the Marshall Plan, designed to maintain ! peace and preserve democracy, through material aid to coun-; tries whose economies were disrupted by World War II. 17 i Macario T. Vicencio, "Democratic Upheaval in the I Rural Areas," Manila Times. January 27, 1956. | 18 ! "The Barrio Moves Ud«" Sundav Times Maeazine. , Manila Tinea .108 Kb. July 17* 1?J5. : 131: Foreign aid was extended t© the Philippines through the j i i ; Foreign Operation Administration, which created the Philip pine Council for United States Aid for this purpose* The | i program required the cooperation of the Filipino people and! their government, from the planning to the astual execution ! j of the joint undertaking* It was a bilateral agreement I 19 ! based on self-help* I j 20 I PHILCUSA Projects. The Agricultural Development ! I ad Forestry Branch of the PHILCUSA embraces the following I i projects: 1* Basic and applied research* 2* _ Extension, demonstration, education, and information. 3* Pest and disease control* i if. Socio-economic survey. \ i 5- Research which will produce direct desirable i results and effects on agricultural products. ! I I The Los Bafios Agricultural College was expanded* A f I |Central Experiment Station was established to conduct ; I f jresearch on the various aspects of agriculture to improve farm methods, techniques, and materials. Research on coco nut and abaca, and their various uses are undertaken* The j i Report on "The Joint Economic Development Program,“ The Philippines Today. 1*7, June, 19^5* P* 5* j ^°Ibid.« p. l*f. | 132' Bureau of Soil Conservation expanded its activities, which j included soil classification and erosion survey, soil analysis service to farmers, soil conservation projects, fertilizer experimentation with major crops, and the like* j i Regional experiments for the improvement of livestock s breeds, feeds, and methods to lower costs of production arej v undertaken, in a project called Animal Production* Research for the protection of the animal population from numerous virulent diseases of the tropics are undertaken in a pro ject named, Animal Disease Control and Production of Biologies* Pest, locust, and rodent control was | instituted. To increase the production of rice and corn, a multiplication and improvement project was undertaken* Fertilizers are distributed through the Fertilizer Adminis tration and the ACCFA* To enable off-season plantings, i Irrigation pumps are being installed. Legislations are enacted to Intensify all efforts to achieve desired results*' I Brief auuraisal. General George Catlett Marshall, j in whose honor this foreign-aid plan was named, said that ! the United States foreign aid shall be: j • • • directed not against any country, but against hunger, poverty, desperation, and chaos* • • that its purpose shall be the revival of a working economy in the world to permit the emergence of political and social conditions in which free institutions can exist.21 21 ’ ’ E.C.A. in the Philippines— Its Purposes and Pro- | cedures,1 1 The Philippine Journal of Commerce* 18:1. 1?51*__ 133' ! I I : A 1956 report on the progress of the program revealed 50 | I the following achievements * . i | ! 1. The purchasing power of the rural people had j i increased to an estimated 300 millton pesos (150,000,000) through the assistance of the credit and marketing faeili- j ties of cooperatives, whieh the joint program helped to ; i ipromote « ( | 2. A total of 2,873 artesian wells had been dug and constructed for the use of the rural people. i i 3. Seven hundred sixty-one rural health units, j staffed and equipped, had been established. if. Fourteen malaria centers and 69 hospitals had ! I been rehabilitated and expanded, which has reportedly reduced malaria eases to 75 per cent. 5. Twenty flood eontrol projects had been constructed. 6. At the time of this writing, a 752-kilometer j road-network (*f66.99 miles) to link provinces in the Min- j i danao area was in the process of completion. f 7. Ten regional labor centers with staff had been installed. 8. Installed five major gravity irrigation projects besides 120 pump units which now serve 112 FaCoMas. 9* The joint program was responsible for sending a i total ©f 899 qualified Filipinos for training abroad. j 22Loulse 0. Orendaln, "Economic Gains by the Joint | Program." Manila Times. Mav 12. 1956. . _ _ ! 13^: i V. DEVELOPMENT OF HOME INDUSTRIES I \ ! To encourage the development of home industries, the j Bureau of Public Schools, with the assistance of the Bureau! 1 I of Commerce, Social Welfare Administration, Bureau of Plant! f Industry, Bureau of Agricultural Extension Service, and the Institute of Science and Technology, undertook a project called Handicraft Training. The project has the following objectives:2^ 1. To undertake research and training and pioneer- ing in the new, and improving the old, home industries, utilizing the service of foreign and local technicians in collaboration with skilled artisans who are engaged in these fields of home industries. 2. To up-grade craftsmen actually engaged in the commercial production of home industry products through training in the use of new and improved tools, equipment, | i techniques, and designs, and the adoption of efficient i methods of production. 3. To supply craftworkers continuously with raw or processed materials that are needed in production. *+. To provide the trainees, after their training period, with better and efficient tools, equipment, and machines to increase production. I i I 23 Hilarlon A. Pilapil, "Government Aid to Home Indus- tries,1 1 The Philippine Yearbook of Commerce and Industry. 1955 5. To undertake an Intensive promotion in the t marketing of home in dustry products, locally and abroad, i in order to ereate greater consciousness and more patronage1 ! l for goods made in the Philippines. | Philippine Home Industries j I In a survey undertaken by the Industrial Development I Branch of the PHILCUSA, in cooperation with the Industry and Public Works Division, a eross-seetiom of the Philip pine * s home industries showed factual evidence of the 2b potential capacity of the country in this field. Examples of these industries are:^ Handweavine in Malabon. Rizal. Before the war, weaving .lusi and Pina eloth by hand was a flourishing home industry in Malabon. During the war, looms were destroyed, and caused a setback in the industry. 1 i Duck raising. In the towns bordering Laguna de Bay, and in the Rizal province, duck raising is a very lucrative| business. Statistics of 195** showed that total of **,633 persons in these areas were engaged in duck raising. In 2b i "Industries Unlimited," The Philippines Today. 1 June, 195**» p. **2. j 2^"Cottage Industries in Tagalog Provinces," Commer cial and Industrial Information, Trade Hews, published by the Research and Publications Division, Department of Commerce and Industry, Manila, Philippines, 1:**5, May 25, 1955. I 136 i the Rizal Province alone, which is considered to be the j eenter of the industry, approximately 2,100 persons own an ^aggregate of *+33,*+00 ducks representing a total capital of j I Pi,33^*000 ($672,000). Other types of work emerged from | 1 the industry. For instance, "balut," whieh is an embryonate duck*s egg, is an industry in itself, but is dependent on the duckraising industry. There, too, are the vendors who sell the balut. the shell gatherers who supply duck food, and many others. Buntal fibers extraction industry. This industry is very much related to the buntal hat weaving Industry. The fiber is extracted from the petiole of the open leaf of a 1 burl palm. The buntal hat industry is entirely dependent on the extractors for raw materials. In Marinduque and in Quezon, hundreds of people make fiber extraction their principal occupation. Buri palm is not a monopoly of the l Philippines, but it is only in this country that this fiber is being extracted for industrial use. i 26 I Buntal hat weavers. Surveys have been undertaken to determine the possibilities of organizing industrial cooperatives among the buntal hat weavers of Quezon and 1 Bulakan. Findings revealed that the strongest deterrent j l 1 I ^Budget Justification for Fiscal Year 1956. { / SubMtted to the Committee on Appropriations, Congress, 1 / Cooperatives Administration Office, Manila. / 137; towards suck possibilities was the exportation of buntal ihat fibers to China. The cost of production in China is t very cheap, so that Chinese-made products undersell easily the Philippime-made ones. This resulted in very ruinous j |competitive situation to the pre-war buntal hat Industry of; | ! the country, which was at one time, a monopoly that made j i the Philippines famous for quality hats the world over. Others. Many other home industries which can be | < mobilized as economic stabilizers of the economy of the country are: the wood-carving industry of Paete, Laguna; the mosquito net weaving industry of Bauan and Ibaan; the shoe-making Industry of Marikina; the salt-making industry of Las Pinas, Paranaque, and Malabon; the baeoong. uatls. and dried fish industries of Malabon, Lemery, Taal, and many more• j i VI. OTHER INCENTIVES Other means to achieve reconstruction of the rural areas are being used. President Magsaysay launched a j yearly national contest to eneourage more production of i 27 I rice and corn. ' The three provinces whleh produce the i largest output are entitled to a one-hundred thousand-peso ; i prize ($50,000), whieh shall be used in the construction of 27 "News from the Philippines,” Department of Foreign Affairs. Manila. Philippines, April 2, 1956. 138 I I * I the barrio roads of the three winning provinces* The contest results in more production of rice and corn, better J , i roads, and an aroused interest on the part of the rural | t people. Aside from the cash prize, the farmer who pro- j duces the most, with the highest quality of grain in one hectare (2.*+7 acre) of land, gets the Gold Cross of the Legion of Honor for a prize, from the President of the Philippines, amidst proper ceremonial proceedings. Other prizes given to other winners are tractors, engines, pumps, bags of fertilizers, and the like. VII. SUMMARY i In summarizing the findings of this chapter, it must be pointed out that the government is applying a great variety of means to improve the conditions In the rural areas• The government has, for example, supplemented its ACCFA approach with such measures as: 1. Legislation to combat tenancy injustices through; the Agricultural Tenancy Act of 19 5*+« 2. Securing land for the landless through the National Resettlement and Rehabilitation Administration which provided an aid-to-settlers program consisting of efficient issuance of land titles, soil analysis and recom mendations, technical assistance regarding farm management, construction of farm-te-home roads, preventive and curative health service units, community centers, schools, and playgrounds• ; 3* Various government agencies are giving full ! i i | support and some of them are the Bureau of Lands , Bureau of: I I Soil Conservation, Bureau of Agricultural Extension, ^Bureau of Public Works, Bureau of Health. ! i | b. The Bureau of Agricultural Extension has expanded its activities with its five-point program directed towards i Jthe youth, the women, and all the rural people, among which i were the *+~H Clubs, the Rural Improvement Clubs, and the Barrio Councils. 5. The FOA-PHILCUSA joint program contributed to j some degree in the fight against poverty and chaos in the j i rural areas. i 6. Measures to mobilize the economic potentialities | i unexplored in the many undeveloped home industries of the | i country have been considered, and undertaken. 7. A national contest promoted by the President of ! ! the Philippines to increase the production of rice and com| has resulted into other advantages, which included an j I increase in the production of rice and corn, the construe- ; tion of better roads in the barrios. the inspiring of the j rural people to take upon themselves the task of improving | their own conditions, and lastly, the restoration of nationaL dignity to the farmers. 1 ike Having undertaken these and many other welfare projects not mentioned in this study, the present govern-* i ment hopes for brighter prospeets in the near future. The i iACCFA approach, together with the measures mentioned, may effect substantial improvement in the lot of the small Filipino farmer. I CHAPTER VTI S0MMAEI AND CONCLUSIONS Rural reconstruction underlies the problems and the ; j - |welfare of the Filipino nation as a whole* The Philippines j I ; I are economically weak and underdeveloped. The problems of i i I 'thefarmers are basically the same social and economic * I jproblems that have been for centuries retarding Philippine : development. Unless these problems are first solved, { I substantial progress of the nation is unlikely. Moreover, j I rural progress is important in view of the threat of i Communism, which is substantial in the Philippines today. It is easy to lure a poverty-stricken people to an ideology which offersa promise of even slight improvement in their pitiable conditions. Democracy speaks of political equality for all, but unless its blessings are translated ; i into economic development, it is likely to be thrust aside ! I in favor of the Communistic promises. j I The reader will note that the spread of Communism j l I has been concentrated in the undeveloped areas of Asia. In China, it was among the ignorant peasants that the Com- ; 2 i munists have been most successful. The situation of the ; ^Rodger Swearingen and Paul Langer, Red Flag in Japan (Cambridge: Harvard University Press, 1952), Introduction. ! 2Conrad Brandt, Benjamin Schwartz, and John K. Fair-| bank, A Documentary History of Chinese Communism (Cambridge: Harvard University Press, 1952), pp. 80-89. ' ik 2 : peasants in China is not much different from that of the | i Filipinos, As long as the same conditions are permitted in the Philippines, the threat of Communism is present, ; The Philippines is in search for a solution to her ; social and economic problems. To this end, it appears that, unity is the first lesson that the people have to learn. j Many Filipinos believe that cooperative enterprise may t hold the solution to the needs of their country, i | I. SUMMARY I 1. Cooperation in the Philippines is old, deriving i from the oldest ancestors of the present-day Filipinos. j Although devoid of written rules, cooperation was the foundation upon which the economic, social, and political ! I life of the people rested. However, their system of j cooperation was localized in scope, meeting only the needs t |of small groups, not the needs of a whole tribe or nation, j 2. The case of the small farmer is pitiable. He i !lacks sufficient land. The land he has frequently lacks sufficient productivity to provide even a subsistence-level income for him and his family. Yet he, and his like account; |for 70 per cent of the nation*s rural workers, producing i |however, only two-fifths of the national income. His |credit needs have not been adequately met; he uses antiquated farming methids; his marketing efforts are crude and unreliable; being Ignorant, he does not know how to enforce such rights as are his by law, Sinee a high proportion of the Philippine families live in the rural areas, their distress is the nation*s distress. 3. Not until 1907 were steps taken to restore to the people the benefits of cooperative enterprise, with the government taking the lead. First to appear were the agricultural credit cooperative associations, followed by the cooperative marketing associations. | Consumers* and retailers* cooperative associations |were encouraged to enable Filipinos to compete favorably I 'with alien competitors. To further aid them, the retail |trade nationalization law was passed. i Credit unions were found to be effective weapons against the usurbus practices. However, in spite of all the support given by the government, credit union develop ment was slow. Among the reasons which caused the failure of many cooperative associations were mismanagement, lack of proper understanding about the true aims, objectives, and purposes of cooperative associations, pledging of I worthless security for loans, politics, the lukewarm ! attitude of the masses towards the movement, and the most prevalent, is dishonesty. The situation presents both a challenge and a :problem as it becomes evident that the success of coopera tives depends upon the cooperators themselves, and not on ibb' any amount of government support. The spirit of self-help j is very essential. b, A major accomplishment of the government in its | i attempt to reconstruct the rural conditions in the country! i was the creation of the Agricultural Credit and Cooperative Financing Administration. Careful planning has gone into the ACCFA. Its features were drawn from the fund of know- ; ledge gathered in almost half a eentury of government jefforts in trying to solve the credit and marketing |problems of the small farmers. The ACCFA plunged directly into the heart of the problems of the rural areas, and J through its efforts, the people have slowly gained their jfaith in the governmentrs program. i i | The first objective of the ACCFA is to grant credit ; ion liberal terms to the small farmers and to the farmers* cooperative associations. Small farmers may now obtain loans on the strength of their character and productive capacity alone, whereas in the past, rigid security requirements prevented them from using whatever credit i ‘facilities had been available. ! The ACCFA extends three types of loans: I 1. Crop or production loans which are intended to ;help the farmer finance his farm activity. j 2. Farmer improvement loans, which are Intended to enable the farmer to purchase a work animal, farm imple ments, including such items as fencing wires, etc. 3. Commodity loans, which are intended to help the farmer market his produce more profitably. Under this arrangement, the farmer obtains a loan against crops which he deposits in the warehouse of his cooperative. He gets cash in advance, while he waits for a favorable price at which he could sell his produce. The second objective of the ACCFA is to promote groupings of farmers into cooperative associations to i enable them to market their agricultural produce effec- jtively, thus minimizing speculation and preventing 'wasteful methods of distribution. i ; Through the FaCoMas, the small farmers are now able I to resist the dictates of middlemen who enjoy monopolies in the purchase of farm produce. The third objective of the ACCFA is to finanee the facilities which the farmers and their respective coopera tives need for the processing, storage, and marketing of their agricultural produce. This form of assistance is l called "facility loans,” which enable the FaCoMas to build or rent or purchase their own warehouses and rice mills. !It includes the purchase of transportation necessary for marketing the produce of the members, which is used cooperatively by all concerned. The operations of the ACCFA are guided by a five- iyear development program for cooperatives and their | financing. The goals of the program are: l^NS1 1. The development of 1,000 FaCoMas with 1,600,000 j members and to enable them to meet part of their credit or J capital requirements at current production levels within a , period of five years. J I 2. To install and operate warehouses, storage and processing facilities for each of these 1,000 FaCoMas for j maximum efficiency in the marketing of the members* produce• | 3« To increase the output and average income of ( the 1,600,000 farmers. I M-. To transfer the control of the distribution of I I riee and other staple crops to the FaCoMas where they are ; i i located. 5. To train leaders, who will train the people so j that the cooperative way of life may be a permanent aspect ’ of the nation's social and economic life. ] : I To assist in the undertakings of the ACCFA, other | measures were passed to remedy problems such as the tenancy-landlord relationship, lack of land, lack of sufficient knowledge in the proper use of improved farming itechniques, and others, which are a natural adjunct to a cooperative movement* 5. Realizing the need for a well-coordinated program for rural reconstruction, the government undertook, |in addition to the ACCFA approach, the following measures* 2h7] i a. The mew Agricultural Tenancy Act which placed the tenant i n a very advantageous position in his relationship with the landowner, b. Settlers are gLven titles of ownership to the land given to them by the government, who secured the land ! for the landless. The soil is analyzed for the settlers and recommendations are made as to how the farmers can preservej and increase fertility of the land; technical assistance on; l ; farm management is part of the aid program; farm to market roads are constructed; FaCoMas are organized to handle the ; marketing of the farmers* produce; curative and preventive health service units are installed at the disposal of the new settlers; community centers, grade schools, and play* j grounds are built. j t c. Training for the young, through the *+-H j Clubs, Rural Improvement Clubs, and the Barrio Councils, is provided by the Bureau of Agricultural Extension Service. d. Hand in hand with the government, the FAO- PHILCtJSA (Foreign Operation Administration and Philippine Council for United States Aid) joint-aid program are seek ing measures and implementing them to help fight poverty prevalent in the rural areas. e. Home Industries are being encouraged. f. Miscellaneous efforts. For example, Presi dent Ramon Magsaysay launched a national contest to encourage production of rice and corn. To the first three provinces to lead in the production of rice and corn, he offered cash prizes, which may be used for the construction of their roads. For individual farmers who produced the greatest amount of rice or corn in a hectare of land, he offered as rewards tractors, fertilizers, and the like. Close study of the government program for rural development, through the cooperative approach and through other measures designed to augment cooperatives, reveals a well-planned reform program, which for the first time, is dealing directly and realistically with the problems of the rural areas. The citizenry has responded well. Progress is being made, although slowly, and while the government is determined to help improve the conditions in thelural areas the problems in these areas can only be solved through the efforts of the people who live there. II. CONCLUSIONS From the foregoing, it can be concluded that: 1. Self-help is essential in rural reconstruction through the cooperative approach. Without individual initiative, no amount of government help can solve the social and economic problems of the distressed rural areas. 2. The ACCFA approach is developing a new social attitude, necessary for improvement of rural conditions. 1^9 ;The granting of loans, for example, on the basis of character and ability to produce, induces the farmer to become more self-reliable. 3. The ACCFA is achieving results through its FaCoMas, but the farmers need to appreciate more the benefits given to them by the government. *+. The ACCFA as the center of the rural development program, wielding so great an influence on the lives of the people in the barrios, must be non-political if it is to maintain support of the farmer. 5. The organizational structure of the ACCFA ought to be simpler, with lines of authority shown clearly. Complex organizational structure is inefficient and susceptible to abuses. 6. A better public relations program is needed by the government in dealing with the small farmers. Offi cials and planners for rural reconstruction should know the practical needs of each barrio, and must be able to talk to the farmers simply, in the farmer’s own language. The small farmers need help in the enforcement of legal protec tions afforded them, and education is the most effective way. 7. Exponents of the cooperative approach must not presume that they have all the answers, but must welcome 150 other means of advancing the cause of rural reconstruction. : 8. Unless all measures which are designed to j advance the cause for rural reconstruction are implemented by men of faith and integrity, these measures will not fulfill their purposes. If the cooperative approach does not succeed, (and soon), an alien ideology may strip from the Philippines her heritage of democracy. The greatest challenge, after all, to Filipino patriotism, is an unselfish devotion to the needs of the country. If men can be found who can meet this challenge, the cooperative movement may lead the Philippines forward to a permanent place among the democratic nations of the world. BIBLIOGRAPHY A* BOOKS Abrahamsen, Helen M. The Philippine Islands. Pal© Alto, California: Pacific Books, 1953* t Tt C Barrows, David P. History of the Philippines- Chicago: ] World Book Company, 19257 P. 6 . | Bernstein, David* The Philippine Story, Hew York: Farrar, Straus, and Company, 19*+7.Pp. 22-23* Blair, E. H., and J. A. Robertson. The Philippine Islands. Cleveland, Ohio: Arthur H. Clark Company, 1908• Volume VII, p. 17**. Blanc, Elsie Terry. Cooperative Movement In Russia- Hew York: The McMillan Company, 192**• Blankertz, Donald Frederie. Marketing Cooperatives- Hew York: The Ronald Press Company, 19*K>* Bogardus, Emory Stephen. Principles of Cooperation- Chicago: Cooperative League of the U.S.A., 1952. Brandt, Conrad, Benjamin Schwartz, and John K. Fairbank. 4 Documentary History of Chinese Communism. Cambridge, Mass: Harvard University Press, 1952.Pp. 80-89. Casselman, Paul Hubert. The Cooperative Movement and Some of Its Problems- Hew York: Philosophical Library, 1952. Chamberlain, Frederick. The Philippine Problem of 1898. Boston: Bown and Company, 1913. Coulter, John Lee. Cooperation Among Farmers: The Keystone of Rural Prosperity. Hew York: Sturgis and Walton Company, 1911 *. Cowling,Ellis. Cooperatives In America: their Past. Present, and Future- Hew York: Coward-McCann, Inc Cuademo, Miguel Sr. Quideposts to Economic Stability and Progress. A Selection of speeches and articles of the author who is the Governor of 'the Central Bank of the Philippines. Manila: Carmelo and Bauerman, 1955* Durell, Fletcher. Cooperation: Its Essenee and Background. Cape May Court House. N.J.: Gozette Print Shop. 1936. 153 Fabra, Ribas Antonio* The Cooperative Movement In Latin buquerque: The University of New Mexico Gjores, Axel* Cooperation In Sweden. Manchester: The Cooperative Union, Ltd., 1937. IHolvoake. George Jacob. The Historv of Cooperation, i London: T. E. Unwin, T 9 0 8 . Hough, Eleanor Margaret* The Cooperative Movement i London: P. S. King and Sons, Ltd., 193F. Jesness, Oscar Bernard* The Cooperative Marketing of Farm Products. Philadelphia and London: J.B.Lippinwatt Company, 1923* Kress, Andrews John (ed.). Introduction to the Cooperative Movement. New York and London: Harper and Brothers, Landis, Benson Young. Social Aspects of Farmers* Coopera- Marketing. Chicago: University of Chicago Press, Leang-Ll, T*ang (ed.). Sapjoyf.sg^g gommBnlsfe In China. 299 Szechuen Hoad, Shanghai: China United Press, 193h- . P. 2. Malcolm, George A. fhe Commonwealth of the Philippines. Hew York: D. Appleton-Century Company, Inc., 1939* P.25< ... . The First Malayan Republic. Boston: The Christopher Publishing House, 1951* P. 3**5« Odhe, Thorsten. Finland: A Nation of Cooperators. London: Williams and Horgate, Ltd., 1931* Ogata, Kiyoshi. The Cooperative Movement 1 n Japan. London: P. S* King and Son, Ltd., 1923* Orne, Anders Emanuel. Cooperative Ideals and Problems. Manchester: The Cooperative Union, Ltd., 1937* Howe, Frederic Clemson. Danmark- the Cooperative Wav Hew York: Coward-McCann, Inc., 1936. Miller, Hugo H. Economic Conditions in the Philippine Boston: Ginn and Company, 1913* P7 2, _1 19* Paekel, Israel, The of Cooperatives * Company, Inc.,1' S & S L Prgmlm&loy and Ogeratljsn Albany, Hew York: M, Bender and Panunzio, Constantine Maria. Self-help Cooperatives in Los Angeles. Berkely, California: university of California Press, 1939. Passfield, Sidney James Webb. The Consumers* Cooperative Movement. London, Hew York: Longmans, Green and | Company, 1921. . The Philippines. A handbook ©f information. : Manila: Issued by the Philippine Information Agency, Office of the President of the Philippines, n.d. j Pp. 3-**. Beeves, Emery. The Anatomy of Peace. Hew York. London: Harper and Brothers Publishers, 19*+5« p* 109. Smith, Gordon, Sir Lionel Eldred Pottlnger. Cooperation in^Manv^Lands. Manchester: The Cooperative Union, Steen, Herman. Yt~ Ma^g^ing, J&gi Golden Rulq in Agriculture. Gordon City, Hew York: Doubleday, Page and Company, 1923. Swearingen, lodger and Langer, Paul. Red Flag in Japan. Cambridge, Mass.: Harvard University Press, 1952. Warbasse, James Peter. Problems of Cooperation. New York: Island Press, 19**2. B. PUBLIC DOCUMENTS Act Ho. 1^59 entitled "Corporation Law of the Philippines•" Act Ho• 2506 entitled "The Agricultural Credit Cooperative Law" dated February 5, 1915* Act Ho. 2818 entitled "An Act Creating the Bice and Com Fund," dated 1919• Act No* 3*t25 entitled "Cooperative Marketing Law,” dated December 99 192?* Administrative Order No* 98, "Authorizing the Government Officers and Employees to Become Members of Consumers* Cooperative Associations,” dated July 13, 1939* lagge£ &2L the gjpal ygg..r, 1256. Submitted to the Committee on Appropriations, Congress of the Philippines, by the Cooperatives Administration Office, Manila* Circular No* 32* "Basie Rules and Regulations for Rural Banks,” June 19, 1952. Commonwealth Aet No* 565$ "An Act Providing for the Organi zation of Cooperative Associations, Authorizing the Creation of an Agency or Designation of an Instrumental* lty of the Government to Promote and Supervise the said Associations, and Providing Funds for the Promotion and Supervision of the Same,” June 7, 19**0* Commonwealth Act No* 7139 ”An Act to Amend Section 5 of Commonwealth Aet No* 565 entitled *An Act Providing for the Organization of Cooperative Associations, etc.*” November 1, 19^5• Executive Order No* 93* "For the Creation of the National Cooperatives and Small Business Corporation,” dated October **, 19^7♦ Executive Order No. 322, "Providing for the Buies and Begulations Governing the Organization, Operation, and Dissolution of Cooperative Associations,” dated February 59 19^1* Executive Order No. 36*f, "Abolishing the National Coopera tives and Small Business Corporation and Transferring its Powers, Duties, Functions, Properties, Assets, and Liabilities to the Department of Commerce and Industry and for other Purposes," dated November 10, 1950* Republic Act No* 7I9 "An Act Requiring Tags or Labels to be Affixed on all Articles of Commerce Offered for Sale at Retail and Penalizing Violators of Such Requirements,” dated October 21, 19^6* Republic Act Ho. 76, wAn Act to Repeal Laws or Provisions of Laws Granting Rights to American Citizens. Corpora tions and Associations, Unless They Affect Rights Already Vested under the Constitution or Extended by Treaty, Agreement or Convention with the United States of America, " dated October 21, 19**6* Republic Act Ho. 85, “An Act Creating the Rehabilitation Finance Corporation— A Corporation Chartered by Said Special Legislation,'* dated 19^7• Republic Act Ho. 89, "An Act to Amend Section b of the Commonwealth Act Ho. 565, by Withdrawing the Exemption Granted in Favor of Cooperative Associations Referred to Therein from the Payment of Taxes," dated Oetober 30, Republic Act Ho. 680, "An Act Creating a Bureau of Agricul tural Extension, Defining Its Powers, Duties, and Functions, and Providing Appropriations, Therefore," dated April 2b, 1952. .Republic Act No. 720, "Rural Banks Law," June 6, 1952. > Republic Act Ho. 821, "An Act to Establish an Agricultural Credit and Cooperative Financing System," August lb, Republic Act Ho. 107*+, "An Aet to Amend Republic Act Ho. 71 Entitled "An Act Requiring Tags or Labels to be Affixed on all Articles of Commerce, etc." dated June 12, 1951 *. Republic Act Ho. 1135, "An Act Creating the Philippine Tobacco Administration, Defining its Objectives, Powers, and Functions, and for other Purposes,"dated June lo, 195** • Republic Act Ho. 1168, "An Act to Provide for the Fixing, under Certain Conditions of the Maximum Selling Priees of Commodities in Short Supply, Creating the Price Control Office and for Other Purposes," June 18, 195*+* Republic Act Ho. 1180, "An Act to Regulate the Retail Business in the Philippines," dated June 19, 195^* Republic Act Ho. 1199, "The Agricultural Tenancy Aet of the Philippines." 157 Republic Act No* 1292, "An Act to Encourage Filipino Retailers and to Create the Filipino Retailers1 Fund," June 15, 1955* Republic Aet No. 13*+5, "An Act Creating the National Mar keting Corporation and Dissolving the Price Stabiliza tion Corporation; Appropriating Funds Therefore and for Other Purposes," dated June 17, 1955* Republic Act No. l4©8, "An Act Providing for the Establish ment of Barrio Councils." C. REPORTS Samml Bgio&tj &2£ the Fiscal Year, July 1, Igjj. to June 1954 of the Rehabilitation Finance Corporation. Manila: Bureau of Printing, 1954. Cooperation in Foreign Countries. United States Federal Trade Commission. Washington: Government Printing Office, 1925. The Development of the Cooperative Movement In Asia. Report Prepared for the Aslan Regional Conference— refer to the International Labor Office. Nuwara Ellya, Ceylon, January, 1950. Geneva, 1949. First Annual Report of the Rural Banks Admintstratlon - Manila: Prepared by the Central Bank of the Philippines, International Labor Office. An Introduction to Cooperative Practices. Geneva, 1952 {Based on atext prepared by W. K. 1. Campbell.) 1953-1954 Annual Report of t£& National Employment Service Bureau„ Manila, Philippines. The Philippine Yearbook of Commerce and Industry. Published ^ annually by the Department of Commerce and Industry. Manila: National Printing Company, Inc., 1955. The Rehabilitation Finance Corporation and Its Accomplish ments . Manila: Issued by the Rehabilitation Finance , 1949. P. 7. 158 to the President of the United States by the Economic oux-vey Mission to the Philippines• Washington. D. C. Reproduced through the courtesy of the Philippine Association, Inc., October 9» 1950. Second Annual Report gf J M Agyiculfoii^l Credit ang, nd Annual Report of the Agricultural Credit and 1953-5H-. Manilas Bureau of Printing, 1955* P . 1 • Seeond Annual Report g£ Jhg Secretary of qgmmqjvqe agd Industry— Fiscal Year. July 1, 19^9 to June 30. 19*f9. Manila* Bureau of Printing, 1952* Seventh Annual Report of the Cooperatives Administration Office— Fiscal Year 1952-53. Manilas Cooperatives Administration Office, August 12, 1953* P. 1* Statistical Bulletin of the Central Bank of the Philippines. Prepared and published quarterly by the Department of Economic Research. Vol. VII, No. 1, March, 1955* Third Annual Report of the Secretary of Commerce and Industry— Fiscal Year July 1. 19^9 to June 30. 1950. Manila: Bureau of Printing, 1952. D. ARTICLES "Agricultural Development," The Philippines Today. 1:7, June, 199+* "Anti-Dummy Board Issues Warning," Industrial Philippines. 5 * ^ * j 1955* Angeles, J. J., "Cooperative Marketing of Farm Products," Philippine Journal of nnmmer^B. 15535, October-November, Arameta, Salvador. "Outlook for Agriculture," Progress *5**. A Times-Mirror Annual Report, 195*+. P. Balmaceda, Comelio. "The Rehabilitation of Philippine Commerce and Industry," Second Annual Report of the Secretary of c.nmmM't** and industry. 19l>2. f* 32. 159 Bigay, Salvador P. legislation to Help Filipino Retailers," This Week/Manila Chronicle. 11:2**, June 10, 1956. "The Consumers* Cooperative League of the Philippines, Inc.J The Cooperator. 1:13., June, 1939* Corpus, Marino R. "Development of Rural Banking,*1 Central Bank News Digest. 7:1. January 3* 1955* Pp. 72-/6. . "Two Years of Rural Banking in the Philippines,1 1 The Philippine Yearbookof Commerce and Industry. 1955* P. 81. "Cottaee Industries in Tagalog Provinces.** Trade News. life, May 25, 1955. "Credit Unions," Handbook on Cooperatives. Issued by the Cooperatives Administration Office. Manila: Ilaya Press, July 6, 1953* P. 13*K "Dumaguete Consumers' Cooperative,*’ The Cooperator. 1:16, June, 1939. "B.C.A. in the Philippines, Its Purposes and Procedures,** The Philippine Journal of Homme-p^. 18:1, April, 1951, p* *+. Giron, Olaf. "WAO Has the Answer,** The Saturday Herald Magazine. March If, 1956, p. 3. Gonzales. Dlndo• "Inside NAMARCO." Philippines Free Press. ¥?s6, February 11, 19J6. P. i6. — »— > HaliH, Alfonso. "The Santa Maria Story." The Philippine Yearbook of Commbrce and Industry. 1955* P* 96. "Historical Development of Cooperatives," Handbook on Cooperatives. Issued by the Cooperatives Administration Office« Manila: Ilaya Press, July 6, 1953* Pp* 3-7* Huber, Allen 1. "What Is a Credit Union?" Philippine Journal of Commerce. 19*+0. "Industries Unlimited," The Philippines Today. 1:7* June, 195*+, p. **2. Laguio, Perfecto E. "Retailers1 ? Fund," Philippines Free Press. *+7:6, February 11, 1956, p. *K). 160 Lerma, Deogracias E. "Our Mew Agricultural Tenancy Act," Progress Manila: Times-Mirror Annual Report, Litonjua, Anatolio. "A New Program of Land Resettlement," Progress *5M-. Manilas Times-Mirror Annual Report, "The Los Banos College Cooperative," The Cooperator, 1:15, June, 1939* Magsaysay, Ramon. "Program for Progress*" Speech delivered by his Excellency, Ramon Magsaysay, President of the Philippines, at the Far Eastern University. Manila: Issued and produced by the National Media Production Center, March 20, 195^* Milan, Primitive C. "Gamal and Other Ilocano Cooperative Customs," The Cooper a tor. I:1 *, August, 1939* Orendaln, Louise 0. "Economic Gains Attained by the Joint Program," Manila Times. May 12, 1956. "Per Capita Income of Farmers Still Low," Progress *5*+. Manila: Times-Mirror Annual Report, 195*K P* 101. Pilapil, Hilarion A. "Government Aid to Home Industries," Yearbook of Commerne and Industry. 1955. P.93* Pineda. Cayetano C«, "Agricultural Extension Work," Philippine Yearbook of Commerce and Industry. 1955. P. 93. Problem of Farm Wages." Progress f5*». Manila: Times-Mirror Annual Report, 1951 * - . P. Quiaolt, Bonafacio A. "The Bureau of Commerce and the Retail Trade Nationalization Law," The Philippine Yearbook of nommArco and Industry. 1955*P. 61. "Trends in Domestic Trade," Progress *5*f. Manila: Times-Mirror Annual Report, 1951 *. P. 135- Saladlno, Luciano A. "ACCFA Completes Three Years of Public Service," Special Features Bulletin in the Philippines Herald* September 9* 1955. Santos, Ruben F. "Labor Problems," Progress t51 ». Manila: Times-Mirror Annual Report, 1951 *. P. 161 Sanvletores, Jose G. "Winning Control of Our Import Trade," The Philippine Yearbook of Commerce and Industry* 195?. P. 21. "19*f6-1956> The Tenth Anniversary of Philippine Independence." The New York Times. Section 10. July 8, 1956. P. 3.--- »-*-*» Vivencio, Macario T. "Democratic Upheaval in the Rural Areas," Manila Times. January 27, 1956. E. UNPUBLISHED MATERIALS Carpio, Jose A. "Cooperative Marketing." Manila, n.d. (Mimeographed.) De Castro, Anastaeio. "The Cooperative Movement and the National Trading Corporation." Manila, nd. (Mimeographed pamphlet.) Ledesma, Oscar, Secretary of Commerce and Industry, in a speech delivered before the Baguio Chamber of Commerce in Baguio City, Philippines, March 25, 1951 * - - P. 1. (Mimeographed copy.) Mendinueto, S. R. "The Cooperative Movement in the Philip pines." Manila: Bureau of Commerce, n. d. (Typewritten form.) Ruiz, Leopoldo Teodosio. "Development and Solution of Certain Socio-Economic Problems of the Philippines With Special Reference to the Present Cooperative Movement." Unpublished Doctor,s dissertation, The University of Southern California, Los Angeles, 19*+2. 162 F. MISCELLANEOUS American Chamber of nonnnerr^ Journal. 3016. June, 195**. Central Bank Neva Digest. Commemorating the Sixth Anniversary of the Central Bank of the Philippines. Released weekly by the Department of Economic Research. Vol. VII, No. 1, January 3, 1955* News from the Philippines. From the Division of Interna tional Information, Department of Foreign Affairs, Manila, Philippines. A weekly mimeographed publication, October 10, 1955. Philippines Free Press. **7:5. February **, 1956. APPENDIXES 16b APPENDIX A NUMBER OF COOPERATIVES (FACOMAS) ORGANIZED AND AFFILIATED WITH THE ACCFA FISCAL YEARS 1953-5l *~55 319.. 160 22 296 1 9 5 3 J955 1956* ’ “As of July 31, 1956 (first month of Fiscal Year 1956-57) appendix b total membership of all cooperatives organized and AFFILIATED WITH ACCFA— FISCAL YEARS 1953-5^-55 188,000 165 135A60 55,687 6,6^3 1953--- 195^ ~1955 1956* ♦As of Jmly 31, 1956 (first month of Fiscal Year 1956-57) APPENDIX C TOTAL AMOUNT OF LOANS MADE TO COOPERATIVES AND MEMBERS, ORGANIZED AND AFFILIATED WITH ACCFA FISCAL YEARS 1953-5^-55 F57,829,820 ) f t f r 2«0M».792 >981,099 F227,6¥+ C 1953' 1955 1955*" ♦As of July 31, 1956 (first month of Fiscal Year 1956-57) university of Southern-California Library

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Asset Metadata

Creator Altiveros, Alfonso Avis (author)

Core Title An analysis of cooperatives as a solution to the basic social and economic problems of the Philippines

Degree Master of Business Administration

Degree Program Business Administration

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag economics, general,OAI-PMH Harvest

Language English

Contributor Digitized by ProQuest (provenance)

Advisor Gilchrist, Franklin W. (committee chair), Dockson, Robert R. (committee member), Mead, Richard R. (committee member)

Permanent Link (DOI) https://doi.org/10.25549/usctheses-c20-138619

Unique identifier UC11263846

Identifier EP43454.pdf (filename),usctheses-c20-138619 (legacy record id)

Legacy Identifier EP43454.pdf

Dmrecord 138619

Document Type Thesis

Rights Altiveros, Alfonso Avis

Type texts

Source University of Southern California (contributing entity), University of Southern California Dissertations and Theses (collection)

Access Conditions The author retains rights to his/her dissertation, thesis or other graduate work according to U.S. copyright law. Electronic access is being provided by the USC Libraries in agreement with the au...

Repository Name University of Southern California Digital Library

Repository Location USC Digital Library, University of Southern California, University Park Campus, Los Angeles, California 90089, USA