The constellation of political forces in the United States that assisted in the resolution of the independence question formed an odd community of interests with the Filipino nationalists. Principal among these were the agricultural interests. American sugar beet, tobacco, and dairy farmers feared the competition of low-tariff insular products, and the hardships suffered in a deepening depression in the early 1930s led them to seek protection through a severance of the colonial relationship. In this they had the support of Cuban sugar interests, who feared the loss of markets to Philippine sugarcane. United States labor unions, particularly on the West Coast, wanted to exclude Filipino labor. A number of American observers saw the Philippines as a potential flash point with an expansive Japan and argued for a withdrawal across the Pacific to Hawaii.
In the climate generated by these considerations, Osmeña and Manuel Roxas, a rising star in the Nacionalista Party and Osmeña's successor as speaker of the House, successfully campaigned for passage of the Hare-Hawes-Cutting Independence Bill, which Congress approved over President Herbert Hoover's veto in January 1933. Quezon opposed the legislation, however, on the grounds that clauses relating to trade and excluding Filipino immigrants were too stringent and that the guarantees of United States bases on Philippine soil and powers granted a United States high commissioner compromised independence. After the bill was defeated in the Philippine legislature, Quezon himself went to Washington and negotiated the passage of a revised independence act, the Tydings-McDuffie Act, in March 1934.
The Tydings-McDuffie Act provided for a ten-year transition period to independence, during which the Commonwealth of the Philippines would be established. The commonwealth would have its own constitution and would be self-governing, although foreign policy would be the responsibility of the United States. Laws passed by the legislature affecting immigration, foreign trade, and the currency system had to be approved by the United States president.
If the Tydings-McDuffie Act marked a new stage in Filipino-American partnership, it remained a highly unequal one. Although only fifty Filipino immigrants were allowed into the United States annually under the arrangement, American entry and residence in the islands were unrestricted. Trade provisions of the act allowed for five years' free entry of Philippine goods during the transition period and five years of gradually steepening tariff duties thereafter, reaching 100 percent in 1946, whereas United States goods could enter the islands unrestricted and duty free during the full ten years. Quezon had managed to obtain more favorable terms on bases; the United States would retain only a naval reservation and fueling stations. The United States would, moreover, negotiate with foreign governments for the neutralization of the islands.
The country's first constitution was framed by a constitutional convention that assembled in July 1934. Overwhelmingly approved by plebiscite in May 1935, this document established the political institutions for the intended ten-year commonwealth period that began that year and after July 1946 became the constitution of the independent Republic of the Philippines. The first commonwealth election to the new Congress was held in September 1935. Quezon and Osmeña, reconciled after their disagreements over the independence act, ran on a Coalition Party ticket and were elected president and vice president, respectively.