Philippine trade2


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Here is the handout in Phil. Trade sorry if I did not send to your mails ^_^

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Philippine trade2

  1. 1. PHILIPPINE TRADEA Brief History Records show that trade relations with China and the Philippines started in the 9th century, largelyinfluenced by a new route to mainland China via the South China Sea. When Arab traders were barred toenter Central China, they established this alternative route passing the Strait of Malacca, to Borneo, Suluand to Taiwan, from where they smuggled their goods to Fookien (now Fujian) province unto Shanghaiand even reaching the northern China territories. This trade route was the precursor of the world famousspice route that triggered interests among European nations, particularly the Dutch, Portuguese, Spaniardsand even the British to gain control of the spice trade.`1 During the Sung Dynasty (960-1127 B.C.E.), China traded with many Philippine islands, notably,the numerous Chinese porcelain artifacts in Calatagan, Batangas pre-dated Spanish arrival in thePhilippines.2 During the Ming period (1368-1644), China expanded foothold in the islands byestablishing coastal colonies in the western seaboards of Luzon from Ilocos to Mindoro, and eventuallyreaching northern Palawan.3 By mid-12th century to 14th century, Siam (Thailand), Cambodia (Funan &Chenla), Annam (central Vietnam), Champa (south-central Vietnam) and Tonkin (northern Vietnam) alsobegan to trade with the Philippines, particularly their porcelain (chinaware) for Philippine native wares.At this time, Indo-China trade accounted almost 50 percent with the southern Philippine islands. Thisheated competition between China and Indo-China declined with the advent of Javanese or Madjapahitperiod (1377-1478).4 When the Ming emperor, Yung Lo (1402-1424) came to power, China sent a large fleet consistingof sixty ships to the Philippines with Admiral Cheng Ho as the naval commander. They raided the coastaltown of Lingayen, Pangasinan then proceeded to Manila Bay, Batangas, Mindoro and eventually reachedSulu. These took place between 1405 to 1417, and Emperor Yung Lo even maintained sovereignty overLuzon, with Lingayen as its base. He then appointed Ko-cha-lao as “governor”. However, this was short-lived because Emperor Yung Lo died in 1424.5 Islam meanwhile arrived in southern Philippines. Brought by the Arabian scholar, Mudum ,sometime in 1380, he successfully converted to Islam the natives, however, it was Raja Baginda fromSumatra who was later credited for the widespread establishment of Islam in Sulu. Abu Bakr, fromPalembang, Sumatra also arrived in Sulu in 1450, subsequently married Paramisuli, daughter of RajaBaginda. After the death of Raja Baginda, Abu Bakr succeeded in establishing the Sultanate of Sulu.6Records also show that between 900 and 1200 A.D., Sulu traded heavily with the Orang Dampuans ormen from Champa (central Vietnam). The Orang Dampuans were not politically motivated, however,jealousy from the native Buranuns largely triggered by the wealth accumulated by the Orang Dampuansaroused suspicion from the local populace, thus in no time, they massacred the hapless foreigners. TheOrang Dampuans retaliated, leveled the villages of Buranuns, and sailed back to their country.7 Sulu prospered, its wealth thus attracted another group, this time from Banjarmasin, from thesoutheastern part of Borneo. Sulus famous pearls drew the interest of Banjarmasin merchants. A traderelation was established. The men of Banjar brought their beautiful princess to Sulu and offered her tomarry the local ruler. In due time, Sulu came under the influence of Banjarmasin, thus leaving theBuranuns retreating to the mountains for safety. The wily Banjar men were able to transform Sulu into acommercial hub, where transient ships from China, Cambodia, Annam, Java, and Sumatra laid anchor ather ports.The Sultanate of Sulu came from this lineage.8Page 1 Copyright@FranciscoPacifico
  2. 2. PHILIPPINE TRADE With the spread of Islam in southern Philippines particularly Sulu and parts of Mindanao, tradewith Borneo, Sumatra, Java, Melaka (western Malay peninsula) formerly a base for pirates who preyed onshipping passing through the Strait of Malacca, eventually became the center of the Mataram empire,which superseded the Hindu Majapahit empire- an empire that owe its power to rice production andcommerce. Mataram empire reestablished a united Muslim empire over central and eastern Java. IbnBatuta, a famous Arab traveler and Islamic preacher, noted in his travelogue that he traveled to Pasai in1345, and converted a local chieftain, a descendant of Malik al-Salih, to Islam, thus, Islam started tospread its wings in this region. Earlier, a Hindu kingdom stamped its influence over a wide area of Javaand Sumatra, it established the Srivijaya empire, that brought along Buddhism that rivaled the HinduMajapahit influence. Srivijaya (600-1200), was principally into commerce, and at the height of its power,controlled the Malay and Indonesian seas with its powerful fleets.9 The Strait of Malacca (also Melaka), is the narrow seaway between the northeastern part of theIndonesian island of Sumatra from Banda Aceh to Medan, stretching to Singapore and the western part ofthe Malay peninsula from Langkawi down to Johor Baru. Since ancient times, this has been the crossroadof Asian, Middle Eastern and European trade route and civilization. Arabs, Chinese, Indians, Persians andTurkish sold their goods round the coasts of Malay archipelago. Traders of these countries gathered inports on the Strait of Malacca, along northern Java and other Indonesian islands to buy and sell Asiangoods such as raw silk, textiles called batik ,and china porcelain. Mediterranean and European traderspartake of goods such as nutmeg, mace, and sweet-smelling wood called camphor, onion, garlic, pepperand other spices. In the 1500s, goods from the Indies could reach Europe through the easternMediterranean. Muslim traders, carried goods from Asia and sold them to European and Arab merchantsin Damascus or Istanbul. Merchants mostly from Venice, Italy handled the European side of thistransaction.10 In the early 1500s, the Portuguese were the first Europeans to appear in the East Indies (thecollective term to the Indonesian and Malay archipelagos). In 1497, Vasco da Gama, a Portugueseexplorer, sailed beyond the Cape of Good Hope, and found his way eastward across the Indian Ocean tothe port of Calicut on the Malabar coast of India. They were looking for “new routes” to the East Indies tobreak the monopoly of Muslim and Venetian traders on Asian goods.11 The Portuguese built trading posts and fortresses in this area. They came to build a tradingempire. In 1509, Portugal sent four trading vessels to Melaka. At first, the Sultan of Melaka received themwarmly, however, when the Sultan found the true intentions of the Portuguese, he attacked them, and tooksome as his prisoners. In 1510, the Portuguese annexed Goa, on the western coast of India, and made Goaas a base. In 1511, the new Portuguese viceroy in the Indian Ocean, Alfonso dAlbuquerque, attackedMelaka from Goa and succeeded in defeating the Sultan. Melaka, being of strategic importance, thePortuguese did not waste time to build their fortress to control the trade of western Indonesia as theMelaka sultanate had done before.12 Meanwhile, Ferdinand Magellan (Fernão de Magalhães), a Portuguese sea captain in search of asponsor, finally persuaded King Charles I of Spain after he was rejected by King Manuel I of Portugal forhis maverick idea to set sail to the Spice Islands (Mollucas or Maluku) through a westward course,traversing the Atlantic and then to the vast new unknown ocean which was later named by Magellan asthe Pacific Ocean due to its pristine calmness when he and his men crossed through it for 98 days.Magellan first went to the East Indies with the fleet of Francisco de Almeida, Portugals first viceroy toIndia.13 In 1506, he went to east coast of Africa to strengthen Portuguese bases there upon orders of deAlmeida. In 1507, he returned to Goa, India, where he participated in naval and trade battles against theTurkish fleets. Coincidentally, in 1509, Magellan was with the four trading vessels that sailed from Goa toMelaka, which was at first kindly received by the Sultan of Melaka, however, the Sultans intuition and ofPage 2 Copyright@FranciscoPacifico
  3. 3. PHILIPPINE TRADEcourse also spies, found out the real intentions of the Portuguese, thus the Sultans order to massacre thecrew, and took some as his hostage. The Sultan felt the presence of the Portuguese was a threat to hisfabled spice and Asian trade.14 On September 20, 1519, Magellan set sail from San Lucar de Barrameda in southern Spain, hecommanded a total of 241 men and a fleet of vintage ships, the Concepcion, San Antonio, Santiago,Trinidad and Victoria. Magellan received instruction from Charles I to sail directly to Maluku and bringback a cargo of spices. However dissatisfaction among the crew plagued the voyage from the beginning,and hostility among the Spaniards toward Magellan was inevitable.15 Magellan skirted unknownterritories and sailed westward to the southern tip of South America, and discovered a passage at Tierradel Fuego in Argentina through inland islets connecting to southern Chile, thus avoiding the turbulentwaters of the dangerous Drake passage. This new route is now called the Strait of Magellan. It shortenedthe voyage by several days and brought Magellan and his men directly to the Pacific Ocean. 16 After sailing northwestward, and Magellan sighted Rota and Guam, and stayed for few days toreplenish their supplies. As chronicled by Pigafetta, these islands were full of ladron (thieves), becausethe explorers lost many of their belongings. Thus they named Guam and Rota as the Ladrones islands.Magellan landed at the island of Limasawa, now part of southern Leyte, on March 17, 1521, a day isadded up as a readjustment to the international date line as indicated by various historians.17 In April 1521, Magellan was killed in the now famous Battle of Mactan, which was actually abattle of rival Mactan chieftains, Lapulapu and Zula where haplessly Magellan intervened to show thesuperiority of his forces over the natives. This bravado did not only cost the life of Magellan, it almostdoomed the entire voyage. Only one ship, Victoria, the smallest and most antiquated, commanded byJuan Sebastian del Cano completed the voyage back to Seville, Spain in 1522 via the Indian Ocean andthe Cape of Good Hope at the tip of South Africa. However, Magellan was credited as the first man tocircumnavigate the globe. First he was able to prove his theory that the East Indies could be reached bysailing westward to the Atlantic Ocean. He discovered the passage to the Pacific Ocean. He proved thatthe world was round and not flat as earlier claimed by ancient astronomers and Greek thinkers Aristotle,Ptolemy, Galen and Archimedes of Syracus. 19 After 1492, when Christopher Columbus sailed to theAmericas, a Polish astronomer from Krakow named Nicolaus Copernicus theorized that the earth wasround, and indeed, earth was not the center of the universe. Fearing for his life and excommunicationfrom the dominant Roman Catholic Church, Copernicus theory laid dormant until finally Magellanreached the Philippines, and completed what could have been his first voyage around the world.Magellan also proved that America was a land mass separate from Asia.21Quest for New Lands, Wealth, Trade and Roman Catholic Expansion Several motivations including acquisition of new lands or territories, the famous spice trade ofSoutheast Asia, the great riches of the East Indies and Asia, and the spread of Roman Catholicism toarrest the spread of Islam, and a host of other reasons such as innovations in the construction of ships.22Shipbuilders started to outfit ships with triangle-shaped lateen sails in the late 1400s earlier perfected byIslamic traders. These ships were able to sail against the wind, not just with it. Multiple masts wereintroduced in place of the single large mast that hoisted smaller sails one above the other which increasedthe speed of ships. Likewise, navigation was made easier by relocating the rudder from the ship side tothe stern. Ships then became maneuverable.23Page 3 Copyright@FranciscoPacifico
  4. 4. PHILIPPINE TRADE Also in the late 1400s, further improvements were incorporated to the European ships usingEvangelista Torricellis theorem, ”the velocity with which a liquid flows through an opening in a containerequals the velocity of the body falling from the surface of the liquid to the opening.”24 Torricelli, anItalian, and a friend of Galileo, another equally brilliant Italian mathematician who supported theCopernican theory of the universe, paved the way for the law of hydrodynamics and hydraulics whichwould benefit the shipbuilding industry of their time. This modern innovation, plus a host of other 1600sdiscoveries in science and technology like the French scientist and mathematician Blaise Pascals own lawon hydrodynamics and buoyancy that states: “a fluid in a container transmits pressure equally in alldirections.”25 And because a caravel drew small amount of water in contrast to the ancient hull, it allowedexplorers to go near shores, and docked their ships to make repairs or replenish their supplies. These shipsalso carried a state of the art weaponry of the time like rifles and long range cannons. In 1493, Pope Alexander VI.26 drew a line of demarcation, an imaginary line running from themiddle of the Atlantic from the North Pole to the South Pole about 350 miles (563 kilometers) west of theAzores and Cape Verde Islands. West of this line all lands belonged to Spain and east of the line toPortugal. A year after, this line was moved 1,295 miles (2,084 kilometers) west of the Cape Verde Islandsby the Treaty of Tordecillas between Spain and Portugal. This supported Portugals claim to territory thatis now eastern Brazil. This line was never surveyed. Scholars think it lays at 480 west longitude line. Acontinuation of the line of demarcation into the Eastern Hemisphere gave Portugal the right to claim thePhilippine Islands. Spain recognized this claim in the Treaty of Saragossa (1529), which set the line 170east of the Moluccas (Spice Islands). In a much later treaties with Spain, Portugal gave up its rights to thePhilippines and claimed instead the rest of Brazil. But Spain and Portugal could not legally extendsovereignty to all lands claimed by both through the line of demarcation because it was nearlyimpossible to secure and establish outposts or governments in these vast new territories, thus France,England and the Netherlands joined the playing field and claimed new territories for themselves.27The Role of the Chinese The Chinese played prominently in Philippine trade. With the establishment of the Walled City ofIntramuros by Miguel Lopez de Legazpi, conqueror of Cebu where he also established the first Spanishtownship in the Philippines and the first permanent settlement in the islands, Chinese immigrantsconverged at the Parian or Alcaceria of Manila in Binondo as early as 1637.28 A community of ChristianChinese and mestizos had risen in Binondo. Chinese mestizos had controlled retail trading business. They set-up shops around Binondo, andnearby Tondo. They peddled their wares across the Walled City of Intramuros and as far as Bagumbayan,approriately named as Manilas new town. Affluent Chinese intermarried with powerful Filipino mestizosand even the Castillan administrators of the colony. Some immigrants from mainland China particularlyfrom Fookien and Canton had acquired properties around Binondo, and controlled much of the foodsupplies such as rice, corn, vegetables, poultry and pigs brought to Intramuros. Much to the chagrin ofthe Indios, the enterprising Chinese dominated the market economics of commodities and commercialsupplies of this colonial era.The Galleon Trade (Manila-Acapulco, 1565-1815) Aptly called the galleon trade, derived from the galley ship used to transport commodities andcommercial goods between Manila and Acapulco de Juarez, and even reaching as far as Callao, Peru. Thistrade route, discovered by Fr. Andres de Urdaneta, was known as the Urdaneta passage, this he gainedknowledge from his return trip to Mexico from Manila. These trade winds blow heavily during thePage 4 Copyright@FranciscoPacifico
  5. 5. PHILIPPINE TRADEmonths of April to June and from December to March. Thus Legazpis arrival in Cebu in 1565 was not amere coincidence but aided heavily by Fr. Urdanetas knowledge of trade winds. This trade wind is astrong wind that blows heavily toward the equator from the northeast or southeast. In the days of sailingships, navigators depended on trade winds for ease of navigation. The paths of these winds were soregular, that early sailors named them trade winds. The belt of rising air between the trade winds is aregion called mild winds or doldrums. It is so calm that sailing ships were often stranded for weeks in thisarea. For sure Magellan was caught in the doldrums, that is why he called the new seas he discovered asthe Pacific Ocean, a sea of relative calm and quiet.29 The galleon trade was a Spanish government monopoly. Only two ships were used One sailedfrom Acapulco to Manila, carrying P500,000 worth of goods, traversing the Pacific for 120 days; theother ship carried P250,000 worth of goods from Manila to Acapulco, sailing across the Pacific forapproximately 90 days. Through this trade, Asian goods found its way to America. However, only theChinese and Spaniards benefited from this trade. The Philippines became only a transhipment port asChinese goods were brought to South America. Very few Filipinos made money out of this trade. Spicesand silk for Mexico and Peru and gold and silver coins for the Asians were the commodities exchangedand carried in this trade that lasted for two hundred and fifty years. This trade however brought to the Philippines countless flora and fauna such as avocado(guacamole), guava, papaya, pineapple, coffee, cacao, chayote, cassava, potato, corn (maize), cattle andhorses. The Philippines sent mangoes, tamarind, rice, the carabao, cocks, Chinese tea and textiles,fireworks, tuba (a native wine from coconut), and chinaware. Mexicans incarcerated at various Spanishprisons were sent to the Philippines for hard labor in the rice fields of Pampanga, thus a town in thisprovince is aptly called Mexico. Shipbuilding industry in the country was enhanced by the galleon trade. Although prior to thecoming of the Spaniards, the natives were already pre-occupied with shipbuilding and lumbering.According to Morga, the Filipino had already the knowledge of building ocean-going vessels. Theavailability of good timber and hardwood coupled with the ingenuity and craftsmanship of the natives,explained why Filipinos were good sailors and shipbuilders. The port of Cavite, Puerto Galera andNaujan in Mindoro were among the leading shipbuilding centers of the islands. The Filipinos constructedall sorts of boats called by the Spanish as banca, balangay, lapis, virey, caracoa, vinta and prau or paraw. A related industry to shipbuilding was weaving all sort of cloth and rope making. The Spaniardsintroduced the massive plantation of abaca, whose fibers are the primary source of material for makingropes. This was called the Manila Hemp industry and further developed by the Americans, and manilahemp became synonymous to a world class product so much valued by ocean-going vessels for tying theiranchors and sails. For two hundred years, the Philippines had no equal in this industry. The coconut industry was also another native industry that provided the Spanish colonizers theiroil for lamp, pulleys, and other simple machines used for galleons. Fines and penalties were exacted toFilipinos who did not comply with producing enough coconut and abaca. The galleon trade was not meant to conflict with planting and harvesting of native staple cropssuch as rice, corn, and sugar, but this was not happening. Agriculture, fishing, and other cottage industriesstagnated during this time. The few Spanish who invested heavily on this trade became affluent andpowerful. The lucrative trade brought upon the colonizers many luxuries and these were translated into aPage 5 Copyright@FranciscoPacifico
  6. 6. PHILIPPINE TRADEnew found opulence in their homes and in their extravagant way of life. Many vices crept into the sociallives of the Spanish administrators. Many became lazy and were readily copied by the more affluentnatives. This indolence plus a host of other vices such as gambling particularly cockfighting became asocial malady that Jose P. Rizal exposed in his novels: Noli Me Tangere & El Filibusterismo two centurieslater. The beginning of the 19th century saw the decline of the galleon trade. Tobacco which used to be amajor Spanish product brought to Europe had declined in value since the same product was produced inthe new colonies of North America more abundantly. The state of Virginia, whose climate and soil wereexcellent for growing this crop became a leading supplier of tobacco to England and the rest of Europe.Tobacco originated from South America and the Caribbeans. The Philippines also became an importantgrower of this crop from the 1700s to the 1900s. Jean Nicot, a French diplomat – from whom tobaccoreceives its botanical name, introduced tobacco smoking to France in 1560.Spaniards, Dutch, Italiansstarted to smoke tobacco in the 1600s. Sugarcane was already cultivated in the Philippines when the Spaniards arrived. This plant grewabundantly in the South Pacific islands more than 8,000 years ago. Cane was also widely grown in India,and mentioned in records by the Macedonian King Alexander the Great sometime in 325 B.C. ThePortuguese planted sugarcane in their colonies in the west coast of Africa, later in Brazil. The Italianexplorer, Christopher Columbus planted sugarcane in the Caribbean thus sugarcane became also a majorproduct of the Dominican Republic and Cuba. The Philippine sugarcane industry antidated the coming ofthe Americans to our country. A large portion of arable lands in Cavite, Pampanga, Morong, Negros, Ilo-ilo and Cebu had been planted by Spanish friars with sugarcane.The Encomienda System and the Encomenderos The encomienda system was a grant by the Spanish royalty to a meritorious subject (Spaniard) toexercise sovereignty and control to a territory including its inhabitants. It was not a grant of landownership, but more than land ownership because the encomendero exercised sovereignty over theinhabitants including the imposition of tributes and compelling the people to polo or forced labor for theconstruction of churches, municipios,and in the construction of the encomenderos residence and otherprivate buildings. There were two kinds of encomiendas that existed in the Philippines: the royal encomienda andthe private encomienda. Royal encomiendas were reserved for the King and Queen of Spain like theports of Bagumbayan, Santa Ana, Tondo, Malate, Ermita, Malabon and Navotas. Private encomendaswere granted to the crowns subjects who were her favorites or proteges. Examples were Silang, and Imusin Cavite, and Macabebe in Pampanga. One-fourth of the total collection went to the encomendero, another portion to the Church(dominated by Dominicans, Franciscans and Recollects) and the rest to the government. Someunscrupulous encomenderos made big profits by arbitrarily raising the prices of goods under his custody,and even hoarding staple food like rice, corn, coconut oil and sugar, and sell them at higher prices whenthere was shortage of stocks for these food items. Each encomendero collected from the people inaccordance to his caprices and whims. During a surplus harvest, they demanded rice, tobacco, corn andother items. Filipinos would buy the same commodities later at higher prices from the encomenderos.Trade was lopsided in favor of the encomenderos.The Plano General Economico (General Economic Plan)Page 6 Copyright@FranciscoPacifico
  7. 7. PHILIPPINE TRADE Jose de Basco y de Vargas introduced an economic plan by forming a Royal Economic Society ashis advisers in 1780. It was composed of industry leaders, businessmen and professionals to furtherexploit the Philippine islands and its natural resources. His general economic plan included suchmonopolies as the tobacco industry, areca and betel nut, the coconut industry, tuba and basi,andexplosives from Philippine manganese. Cash prizes and medals of recognition were given tobusinessmen and industry leaders in the tobacco farming, indigo, spices, cotton, cultivation of mulberryfor silk production, bee-keeping, inventions, mining and geological discoveries and as well as in generalsciences and arts. In spite of the societys despotic objectives, it provided local and foreign scholarships for trainingand development of artisans and craftsmen, and it even provided professorial chair for agriculture andproduct design. It also introduced mynah birds from China to fight migratory locusts in the archipelago.The society was also credited for advising the governor-general to ban the killing of carabao for meatpurposes. Also during this time, the first Philippine paper mill was inaugurated in 1825. Anotheraccomplishment of this society was the formation of silversmith and goldsmith guilds in the country.The Royal Philippine Company (1785-1815) Charles III established the Royal Philippine Company by virtue of a decree creating such entityon March 10, 1785, and granting the same a charter for the next 25 years with the main objective ofunifying the Spanish crown interests in Asian and South American trade. The company was granted amonopoly of bringing to Manila, Chinese and Indian goods and shipping these directly through the Capeof Good Hope. Modeled after the most successful and longest government-controlled colonial arm, theBritish East India Company, it was vehemently opposed by Dutch and English traders as a directcompetition to their trade in Asia. The new company also met stiff opposition from Manila traders engaged in the Manila-Acapulcogalleon trade. A decree from the monarch assigning ten percent out of 32,000 shares of stocks to theManila merchants and the Church, temporarily halted the crisis. The Manila-Acapulco trade deterioratedas the Royal Philippine Company raked in profits in its first ten years of operation. The company nettedten (10) million) pesos in 1794-1795, out of its initial capitalization of eight (8) million pesos, and in1796, more than fifteen (15) million pesos. The Royal Philippine Company helped tremendously in the advancement of Philippineagriculture with the expansion of farming indigo, sugar, coffee, cacao, spices, dye-wood, mulberry andcotton. Textile weaving was a Filipino traditional cottage industry specially in the northern provinces ofLuzon. Cotton production and weaving were given a priority. Gold, silver, and copper mining were partof the economic agenda. However as trade and commerce substantially grew with this company, theuntold miseries of the Filipino workers and farmers were eclipsed or overshadowed by the profit-takinggoal of the colonizers.Transportation, Communications and Infrastructure Development In 1892, Compania de los Tranvias de Filipinas, was founded and operated by Don Jacobo Zobeland Adolfo Bayo. There were five street car service lines that connected Manila and its suburbs: fourhorse-drawn in Intramuros, Sampaloc, Malate and Tondo, and one tranvia de vapor, (steam engine)between Malabon and Binondo. In the provinces, a horse-drawn tramcar service connected the towns ofPage 7 Copyright@FranciscoPacifico
  8. 8. PHILIPPINE TRADETalisay, Negros Occidental and Dos Hermanas owned by Esteban de la Rama that operated from 1895 to1896. In Manila, there were four kinds of horse-drawn carriages for hire: quiles, arana, victoria, and thecalesa or carretela. The Puente Colgante (now called the Quezon Bridge) was built to ease traffic jamsbetween Quiapo and Arroceros. This was the first suspension bridge in Asia, designed by the famousarchitect, Gustav Eiffel. Manila and Hongkong were service regularly and weekly by ocean-going vessels, while Manila-Barcelona ships arrived monthly. Ships from other countries in Europe, United States and Japan arrivedirregularly. Manila, Cebu and Ilo-ilo were serviced regularly by steamboats. Telecommunications in Manila, though reserved for the few social elites, began its service asearly as 1890 with about 170 customers, the numbers 3 and 4 were reserved for the Archbishop and theGovernor-General. Telegraph also started between Manila and Corregidor, and then extended toward theIlocos and Bicol regions, such that by 1892, the Manila-Hongkong cable was laid between Bolinao inPangasinan to Hongkong, thus connecting the Philippines to the rest of the world. Public lighting in thestreets of Manila commenced as early as 1814 with the use of coconut oil. The French lamp, kingke, aninvention of the Frenchman Antoine Quinquet, was banned for use in nipa huts because it caused fire.Until the turn of the 19th century, Intramuros and suburbs were lighted by coconut oil. By 1892, the walledcity and its outskirts were already serviced by La Electricita de Manila, the precursor of MERALCO(Manila Electric Railways and Light Company).The Rise of the British Trade Power and the East India Company The British East India Company carried the British economic might on Indian (continental India)soil and then it spread its wings to the Far East, claiming Hongkong, Singapore, Borneo, The Malaya(now Malaysia) as part of its commercial empire and of course, to some extent certain influences inAustralia, New Caledonia and other South Pacific islands. As Queen Elizabeth I long reign came to anend upon her death in 1603, the Tudor monarchs were busy accumulating wealth, effective domesticgovernance and international trade. King Henry VIII was busy enriching the monarchy by confiscating the vast resources and wealthof the Catholic Church and its monasteries. Sir Francis Drake quest for new route to the Indies broughthim at par with the footsteps of Magellan, sailing across the Atlantic and to the South Pole near Argentinawhere he found a passage that eventually brought him to North America near the present site of SanFrancisco and named the area New Albion. He planned to sail back to England via the Atlantic Ocean, butDrake feared an attack from the Spanish armada would ensue particularly he raided Spanish andPortuguese ships in the Atlantic earlier. Thus he decided to cross the Pacific and found his way to theIndian Ocean , to the Cape of Good Hope and finally reached Plymouth, England on September 26, 1580with a cargo of silver, gold and jewelries stolen from Spanish and Portuguese ships. This voyage of SirFrancis Drake with his flagship, the Golden Hind, that circumnavigated the globe, marked the beginningof the British naval supremacy in the next two centuries. The business classes in England had organized themselves into a trade association with an endview of investing in domestic and international trade. They too had accumulated substantial wealth andsavings for investment. Under the Tudor monarchy, one modern business history unfolded with thecreation of the British East India Company. This single corporate activity would make England the centerof modern international trade.Page 8 Copyright@FranciscoPacifico
  9. 9. PHILIPPINE TRADE At first the British was slow at building their own East India Company, but rapid Dutchexpansion in the Far East compelled them to take action. As John Keay notices in his history of thiscompany: “The final straw came with the news that the Dutch were now seeking to augment their easternfleets by purchasing English shipping. Arguing that the national interest was at stake, in July 1599- justtwo months after ships of the second Dutch fleet began returning with packed holds – a [petition wasready for Queen Elizabeths perusal.”35Significance of the British East India Company The British entry into the maritime commerce and trade, albeit was slow, but was pragmatic andheavily calculated. The Spaniards and Portuguese enjoyed an earlier head start by dividing the world intotheir own spheres of influence, so much so that Pope Alexander VI and subsequently, Pope Clement VIII,gave them half of the unknown world. The Dutch also were not far behind the Iberians, they succeeded infinding opportunities left out by Spain and Portugal. It was the triumphs of the Dutch bringing goods toEurope from the Far East that compelled the British to act and form its own company. The British East India Company was a joint-stock company formed primarily to pursue trade inthe East Indies but resulted in trading mainly with India and China. The company was granted an EnglishRoyal Charter on December 31, 1600 by Queen Elizabeth I. The East India Company traded primarilywith cotton, indigo dye, saltpetre, silk, opium and tea. Aside from its commercial functions, the companyruled a large part of India, exercising both military and administrative functions. Despite of its mega tradeand monopolistic activities, the company remained a powerful force in India and the Fare East includingHongkong, the Malayas, and Singapore from 1757 to 1874.Decline of the Galleon and Spice Trade Fifty years after the death of Christopher Columbus, the galleon trade was inaugurated, and thisbrought to fruition Columbus dream of sailing west to reach east or the Orient. From 1565 to 1815, thegalleon trade route created immense wealth to Spanish colonizers. For 250 years, the galleon tradebrought to Spain their cargoes of luxury goods such as silk, porcelain, gold, silver, spices, tobacco, etc.Spain reaped a windfall of economic and cultural benefits from. However, the Mexican War ofIndependence in 1815 put a permanent halt to to the galleon trade.36 Also, Spains world dominance came to an end as expected when the British Royal Navy ruled thehigh seas. The Spanish armada was no match to the well-equipped, and modern fleets of the Britishempire. The marauding English pirates of the Caribbean were also Spains worst enemies. Often thesepirates engaged the Spanish galleon, and later they were aided by British ships, thus ensuring victory andsubsequent looting of the galleons. Cargoes often found their way to the London market, and to the rest ofEuropean capitals such as Paris in France, and Venice, in Italy. London merchants were the first globalinvestors. They bought stocks of the East India Company. On September 24, 1598, a group of Englishmerchants raised 30,133 sterling pounds to finance more ocean going vessels to India. The followingyear, they increased their capital to 68,373 sterling pounds, and thus the British East India Company wasborn.Page 9 Copyright@FranciscoPacifico
  10. 10. PHILIPPINE TRADE In his book, “An Inquiry into the Nature and Causes of the Wealth of Nations,” AdamSmith(1776), a Scottish economist and moral philosopher, argued and defended that free marketeconomies are more productive and beneficial to the state. He was only actually echoing then what hadbeen long practiced in the English monarchy, as far back as the Magna Carta of 1215, the English Royaltyunderstood well the advantages of allowing and encouraging other, non-royal sources of wealth andpower. These sources, from the wealthy elite could be independent and could complement the authorityand powers of the monarchs. “Of the profits of stocks, Smith used interest rates as an indicator of the profits of stock. This isbecause interest can only be paid with the profits of stocks, and so creditors will be able to raise rates inproportion to the increase or decrease of the profits of their debtors.”38 Smith noted that “curiously, interest rates in the colonies are also remarkably high ( Smithdescribed how wages were higher in the colonies than in England).” Smith attributed this to “the factwhen an empire takes control of a colony, prices for a huge abundance of land and resources areextremely cheap. This allows capitalists to increase his profit, but simultaneously draws more capitaliststo the colonies, increasing the wages for labor. As this is done, however, the profits of stock in the mothercountry rise (or at least cease to fall), as much of it has already flocked offshore.”39 “By contrast, rulers in other nations felt threatened by such developments and inhibited them – totheir detriment. Despite their need for funds to support their high standards of living and to pay for theirwars, many monarchs outside of England continued to dominate the commercial life of the nation – withbaleful results. Not so for the English and this was their unique genius.”40 King James I, successor of Queen Elizabeth, declared that trade to the east could be conducted bythe East India Company, and he asserted that a monarchy can advance its own legitimate interests throughthe creation and licensing of an independent entity. It was entirely a new idea. It would become a seed offuture corporations, that these entities do not have natural rights (monopoly, etc.) but only rightsconferred to them by the state.41 The spice trade, controlled by the Portuguese and the galleon trade, controlled by Spain, felt shortof the standards henceforth set by the British monarchy pertaining to trade. There was no shortage ofsubscribers to the stocks of the East India Company. “This much is clear from the Calendar of StatePapers Colonial – East India Series (1513-1516).42 These official chartering papers state that onDecember 31, 1599, “a privilege for fifteen years (was) granted by Her Majesty to certain adventurers forthe discovery of the trade for the East indies.”43 These concessions emboldened the British East India Company. More adventurers were sent toAsia than North America. In due time, the British seized from the Dutch and Portuguese the control of theStrait of Malacca by building their fortresses, such as in Fort Cornwallis in Penang. The British controlof the sea lanes and a host of other factors saw the decline of the galleon and spice trade, plus of coursethe slow demise of the Spanish empire brought about by regime changes through out Latin or SouthAmerica and as well as in the Philippines. Modernization like the advent of refrigeration, also contributedto the decline of spice consumption.The American Regime American policy toward the Philippines was first capsulized in the Treaty of Paris, a documentsigned by the United States and Spain on December 10, 1898. Spain ceded the Philippines to the UnitedStates and a payment of $20,000,000 was required to pay for Spains rights and improvements in thePage 10 Copyright@FranciscoPacifico
  11. 11. PHILIPPINE TRADEcolony. Also in this treaty, the United States agreed to give the Spaniards the right to ship commodities tothe Philippines for a period of ten years tax free. Similarly, America could export goods to Spain underthe same terms and conditions.44 President William McKinley issued his “Benevolent Assimilation” Proclamation on December21, 1898. It indicated the exercise of sovereignty of the United States over the Philippines and subjugatethe country if necessary through military force. The campaign to colonize the Philippines in thesucceeding years, and put the Filipinos under American rule cost the lives of more than 5,000 Americansoldiers, however, on the Filipinos, some 500,000 were butchered by the Americans. The Fil-Americanwar became a war of attrition that exhausted the resources of the colonizers and the Filipinos. It was thecruelest war ever waged by America, in which human rights, the right to surrender and be taken prisonersof war, was never practiced wholesomely. By definition, America waged a war of atrocities that “noteven children be spared.” The marching orders came from the U.S. President Theodore Roosevelt, St.soon after he heard of the massacre in Balangiga, Samar. “I want no prisoners, I wish you to kill and burn;the more you burn and kill the better it will please me.” He ordered to General Jake Smith that Samar betransformed into “a howling wilderness.”45The Schurman Commission In March 1899, the United States sent Jacob Schurman, President of Cornell University, to heada commission. He succeeded in laying the foundation of a subtle conquest of the Philippines, first bytargeting the Filipino elite, “whose cooperation will usher in a new era in our efforts to colonize thePhilippines.”46 Why the elite? There were two basic reasons: 1. fear of losing their wealth and interestsbecause of the growing demands of the masses for the redistribution of economic resources and benefits;2. the distrust of the elite in the integrity and character of the masses who lacked education, intellect,knowledge and of low moral and questionable character, and thus were regarded as potential troublemakers, bandits and enemies of their own class. The Americans were successful in getting their workstarted with the cooperation of the Filipino elite. Again, this paved the way for American teachers andmissionaries spread out in the archipelago through schools, religious missions and medical work.47The Philippines under this commission was granted political autonomy, meaning the country could begoverned and treated independently as a colony by the United States.The Bates Treaty This treaty, entered into by Sultan Jamalul Kiram of the Sultanate of Sulu and General John Bateson August 20, 1899, allowed American presence in Sulu without necessarily accepting Americansovereignty. There were two versions of this treaty. One local version that called for co-existencebetween the Americans and the Muslims in Sulu, and stipulated for mutual respect for property and otherrights. The other version, an English translation clearly provided for the establishment of American rule inSulu and the acceptance of American sovereignty by the Sultan and the datus. This allowed theAmericans to interfere even on matters concerning to slavery, taxes, peace and order, trade, commerce,foreign relations, except on matters pertaining to religious practices and customs.48The Payne-Aldrich Tariff Act of 1909 Until 1909, American interests in the Philippines was governed by the Treaty of Paris of 1898 thatgave Spain the most-favored-nation treatment. Thus, the Payne-Aldrich Tariff Act of 1909, was the firstPage 11 Copyright@FranciscoPacifico
  12. 12. PHILIPPINE TRADEAmerican instrument that advanced American economic interests in the Philippines. The United Stateswas given the opportunity to exercise “free trade” with the Philippines. This was however a uniquesituation because the exercise of “free trade” means freedom of the Americans to trade with thePhilippines absolutely free, without tariffs and quotas. The Philippines, on the other hand, was limited bya quota system. Philippine exports to the U.S. Were governed by quotas and limited only to raw materialsneeded by American businessmen.49Underwood-Simmons Tariff Act As economic dependency became the pattern between the Philippines and America, theUnderwood-Simmons Tariff Act was enacted in 1913, by the administration of President WoodrowWilson, abolishing the quotas on Philippine exports. This removed all quotas on Philippine products andcomplete free trade was established (except for a provision that Philippine manufactured articles exportedto the United States free of duty should not contain foreign materials to a value of more than 20 percent).This resulted in binding the Philippines closer to the United States economically, while it gave impetus toPhilippine exports of sugar, copra and coconut oil, abaca or hemp and tobacco a niche market in theUnited States. This supported modest economic growth of the Philippines during this period.50The Jones Law of 1916 The Jones Law of 1916 provided for the creation of a 24-man Senate and a House ofRepresentatives. All the members of the legislature were to elected except the two senators from non-Christian sector, who were appointed by the Governor-General. Under this structure, the localgovernment from the provincial to the municipal level shall be elected by the Filipinos, however, theprovincial treasurer, shall be appointed by the Governor-General. In the economic development of thePhilippines, the law had similar provisions with the Underwood-Simmons Tariff Act.Page 12 Copyright@FranciscoPacifico