The first difficulty met by the United States in the Philippines was an inheritance from Spanish rule. In 1896 the Filipinos, led by Aguinaldo, had risen against the government in order to secure more liberal treatment and to eliminate the influence of the Catholic friars from politics. The "embers of dissatisfaction" were still aglow when the American war intervened. Relations between the revolutionists and the United States forces became strained when the former were not allowed to cooperate with the Americans against the Spanish, and in February, 1899, open warfare followed. Not until July, 1902, was quiet restored, and during the process enough cruelties were practiced by American soldiers to make the anti-imperialists doubly fearful of military control.[4]

McKinley and his Secretary of War—at this time Elihu Root—desired to supplant military government with civil rule as quickly as possible and to this end the President appointed the first Philippine Commission on January 20, 1899, with Jacob G. Schurman, of Cornell University, as Chairman. It was instructed to investigate the situation in the islands and to recommend any action that seemed wise. The unsettled condition of affairs seriously hampered the work of the Commission but it gathered a fund of information which it later published. A second Commission was sent out in 1900, with Judge William H. Taft at the head. The instructions given to the Commission by President McKinley embodied an enlightened colonial policy, the core of which was that the government being established was "designed not for our satisfaction, or for the expression of our theoretical views, but for the happiness, peace, and prosperity of the people of the Philippine Islands." The Commission wielded such large powers that gradually the area controlled by the civil government increased at the expense of the military authorities, and by 1902 only the wild Moros were under military control.

By this time a definite form of government could be planned for, built upon the labors of the second Commission. The Philippine Act of July 1, 1902, provided for a governor appointed by the President, with the advice of the Senate, executive departments, and a legislature, the lower house of which was elected by the people. From the beginning the Filipinos, like the Porto Ricans, have desired a greater range of self-government, and in 1916 long steps were taken in the direction desired by them. The Jones act of that year materially increased the powers of the Philippine government and gave the Filipinos power to elect the upper as well as the lower house of the legislature. The passage of the law met with enthusiastic approval in the islands.

The purpose of American rule in the Philippines has been to fit the people for self-government, although opinions have differed as to how soon the final outcome could be brought about. An early and bothersome problem was found in the friars' lands, which consisted of about 425,000 acres, for the most part in the vicinity of Manila. The possession of so great an area, together with the religious power and the considerable political authority which the friars exercised under Spanish rule, gave the Church a domination which might threaten trouble after the American occupation. The solution of the problem was found in the purchase of the lands for about $7,000,000 by the United States. Efforts have been made to introduce a complete system of education—physical and industrial, as well as academic—with such success that when the Jones bill was being discussed in Congress in 1916 it was asserted that every member of the Philippine legislature at that time was a college graduate. In 1917 the Filipino student body numbered 647,256, with 11,822 teachers. Political education has also been a part of the American idea. Elementary self-government was gradually introduced, starting in the more civilized local municipalities and provinces and confining the suffrage to the educated people, the official classes and property owners. The preservation of order has been more and more entrusted to a Philippine constabulary; civil service officers and school teachers have been increasingly chosen from the Filipinos; and the courts have been partly manned with native judges. Work in sanitation has followed the lines marked out in Cuba and Porto Rico. First and last over 10,000,000 vaccinations were performed before 1914; small-pox has been controlled; attention has been paid to the building of highways and railroads, water supply, the disposal of sewage and allied problems. The precise time, if ever, when independence should be granted to the Philippines is the one great question remaining.

The first attempt to revise the customs laws in the Philippines was made by the Commission during the governorship of William H. Taft. These schedules were revised in Washington in such a way as to discriminate against Philippine interests, but they had remained in force only a short time when Congress passed the act of March 8, 1902, allowing goods grown or produced in the Philippines to enter the United States under a twenty-five per cent. reduction. In 1909, the tariff makers were induced to relent to the extent of allowing the free importation of goods grown, produced or manufactured in the Philippines, except that only a specified annual amount of Philippine sugar and tobacco might be brought in. In 1913 the wall was entirely removed on all trade between the United States and the Philippines in articles made or grown in either of the two countries.

While Congress and the President were concerning themselves with the practical problems of military control, sanitation and the like, the Supreme Court was laboriously considering the less tangible but equally perplexing question of the constitutionality of the several acts which the legislative and executive departments had committed. The power of Congress to acquire territory and the right of the executive to control new territory under the war power had long been conceded. Admittedly, however, government under the war power was temporary and transitional. In earlier times such acquisitions as those effected by the Louisiana purchase and the annexation of Texas had been consummated with the distinct understanding that these regions should immediately or eventually become territories or states in the Union. The status of Porto Rico and the Philippines was novel. "The civil rights and political status of the native inhabitants of the territories hereby ceded to the United States," ran the words of the treaty of peace closing the war with Spain, "shall be determined by the Congress." Did this mean that Congress might govern the new acquisitions independently of the Constitution? Could it abridge freedom of speech, and permit cruel and unusual punishments, or establish slavery? Could Congress permanently govern these lands without giving their citizens the rights of citizens of the United States, and with no intention of ever making them territories or states? On the other hand, if Congress must act within the limits prescribed by the Constitution, would the wild Moros of the Philippines be the beneficiaries of the amendment preserving the right of trial by jury? In the popular language of the day, did the Constitution follow the flag?

It was not long before the Supreme Court was called upon in the "Insular Cases" to express itself upon these constitutional questions. The first case was De Lima v. Bidwell. It was a suit to recover duties paid on goods sent from Porto Rico to the United States during the interval between the cession of the island and the passage of the Foraker Act. The duties had been paid under the Dingley law, which levied customs of specified amounts upon all goods imported "from foreign countries." Was Porto Rico a "foreign" country? The majority of the nine members of the Court thought that it was not foreign, that there was scarcely a "shred of authority" for the view that a "district ceded to and in the possession of the United States remains for any purpose a foreign country." Since Porto Rico was not a foreign country, the duties were wrongfully collected and must be returned. The remaining four justices dissented. One of them delivered a dissenting opinion in which he held that Porto Rico occupied middle ground between that of a foreign country and domestic territory. As such its status could be determined by Congress only and therefore its products were subject to duties levied by the Dingley act.

In Downes v. Bidwell the Court was compelled to determine the constitutionality of the part of the Foraker Act which provided for a tariff between Porto Rico and the United States equal to fifteen per cent. of that levied by the Dingley act. Again the Court divided five to four. Mr. Justice Brown delivered the majority opinion. It was to the effect that the Constitution applied only to States; that Congress possessed unlimited power over the political relations of the territories; that Porto Rico was a "territory appurtenant to and belonging to the United States"; and that the part of the Constitution which says that duties shall be uniform throughout the United States did not apply to Porto Rico unless Congress so willed. Hence the customs clause of the Foraker Act was valid. Four of the majority, however, who agreed with Mr. Justice Brown in his conclusion that the tariff clause of the Foraker Act was constitutional did so for reasons which they asserted to be "different from, if not in conflict with, those expressed" by him.

From the point of view of constitutional law, the decisions were unsatisfactory, because of the balanced division of opinion. Yet to have declared all the provisions of the Constitution in force in all the acquisitions would have been embarrassing. Logic and the Constitution went to the winds, while the executive and legislative departments administered the territories on the convenient and flexible theory that certain constitutional provisions must be heeded and that others need not.

While the colonial policy of the United States was being developed, the possession of the Philippines added interest in the United States to an unusual international situation in China which immediately involved several European nations and eventually affected America. The Chinese-Japanese War, which came to a close in 1895, had uncovered to the world the weakness of China as a military power and had weakened the hold of the reigning monarch upon the people of the Empire. Thereupon the leading commercial nations of Europe began to seize portions of China in order to extend their trade relations in the Far East. Russia first attempted to obtain a seaport, but retired when an uproar of protest arose from the remainder of Europe. Not long afterwards, two German missionaries in the province of Shantung were murdered. The outrage formed a sufficient pretext for aggressive action, as a result of which China leased Kiaochau to Germany for ninety-nine years, including in the grant railway and mining privileges and an indemnity; Russia then renewed her attempt and succeeded in leasing Port Arthur and Talienwan for twenty-five years. Great Britain followed with the acquisition of rights in Weihaiwei similar to those of Russia in Port Arthur; Japan found its share in the province of Fukien, and France in Kwangchaouwan. In each case, moreover, the leasing power designated a large area around its holdings as a "sphere of influence," in which its economic and political mastery was complete. In this way, thirteen of the eighteen provinces of China, including the most desirable harbors, waterways and mines, were partially controlled by the powers.