Lou Marxis Gallevo Prof.

Ruby Liwanag
III-9 BSSE Philippine Development Experience

Philippines: The Economic Situation during Pre-Colonial and Early Colonial

Philippines is an archipelago with 7, 107 islands and islets. The strategic geographical location of
the country is one of the primary factors in experiencing colonization during the mercantile era
(Merchant, 2009). Philippines being situated near at the equator provide an appropriate
climate in producing agricultural goods such as fruits, vegetables, aquatic animals, and others.
This helps the people of the islands to provide materials and goods that will benefit their family
and the society, since; Philippine society has influence of Confucian values. More so,
geographical structure of the archipelago; having wide-range of mountains, long coasts, wide
plains and islets hone the way of living of the people (Diamond, 1997).

The Pre-Colonial Philippines

Before, the archipelago was constituted of small islands wherein every islands has their own
political system called ‘Barangay’- An early settlement in the Philippines was referred to as
barangay, a Tagalog word originally meaning “boat,” referring to a boatload of related people,
their dependents, and their slaves. These kinship groups were led by a datu, hence “barangay”
also meant the following of a datu, a political community defined by personal attachment, not
territorial location. The barangay settled together in a community ranging from thirty to one
hundred households, and through subdivision, many were still that size when the Spanish
arrived in the sixteenth century- (Corpuz, 1997; Guerrero, 1970; Agoncillo, 1960). Since, the
area was surrounded by waters, most of the people were sea fearers, and thus, they were able
to have a contact with the kingdoms in Southeast Asia and North Asia; especially in China and
Japan (Salazar, 1999). According to Samuel Tan (2008) in his book History of The Philippines,
during the 500 B.C.E to 900 C.E; the Neolithic Era, there were jade ornaments in the
archipelago which have an affinity to the ornaments of Vietnam as an artifacts belongs to the

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Sa-Huynh1(North east coast of Vietnam) . Hence, this suggests vividly an extensive interaction
between the archipelago and the rest of the Southeast Asia, in effect, a highly developed
maritime technology and trade. More so, as evidence to the prior conclusion, there was 15-
meter length boat being excavated during 1978 at Butuan, which was dated 320 C.E., this type
of sea craft can explore adequately the interisland and interregional travel (Tan, 2008).

In the 618 B.C, the islanders began the first contact to Tang Dynasty, China (Abinales and
Amoroso, 2005; Salazar, 1999). Henceforth, the Chinese economic and Socio-cultural influences
came by the way of Chinese porcelain, silk and traders/merchants, the latter was being
engaged with the traders of India that filtered through the Indianized Empires in the Southeast
Asia; the Srivijaya and Majapahit Empires (p. 31). Furthermore, in the 5th century C.E, the
Kunlun ship presumably from Java and Shrivijaya have traded with the Philippines and other
Southeast Asian Countries, and China (p. 32). In the late Neolithic, wet cultivation marked an
essential point in the economic development of the archipelagic communities. The irrigation
system was then implemented, likewise, the husbandry or domestication of animals, which
resulted to the emergence of surplus of agricultural goods and other products out of the
abundant resources (p. 27). In addition, 982 C.E Ma-i, probably Mindoro, brings goods directly
to Canton for the first time. As evidence, Laguna Copper Plate was found in Laguna during 1986,
the inscribed document was written using the Sanskrit. This artifact shown that there is an
interisland contact between the people of one kingdom to another; however, the main content
of the evidence was about the leader and his family or clan who was acquitted of debt to the
Chieftain of the Kingdom of Tondo. This implies that even before, barrowing of goods or money
were part of economic activity and system of the islanders. More so Abinales and Amoroso
(2005) described the local community as:

In this locally focused world, attachment to one’s own group and village was strong. This can be
seen in the attitude toward outsiders. At the beginning of the tilling season, no strangers were
allowed in a village while ceremonies were conducted for a productive harvest. Likewise, a
family engaged in harvesting rice would allow no outsiders into the house, lest the fields yield

1
Solheim, W. (1959). Introduction to Sa-huynh. Retrieved October 1, 2016, from http://hl-128-171-57-
22.library.manoa.hawaii.edu/bitstream/10125/16640/1/AP-v3n2-97-108.pdf
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 nothing but straw. Upon pain of death, strangers were warned away during the funeral of a
datu. Further evidence is found in the differential treatment of slaves from within the
community and those from outside. Slaves born within a household were considered part of the
family and were rarely sold. On the other hand, when a life was to be sacrificed—for instance,
when a slave was to be buried with a great datu to serve him in the afterlife—someone
captured in war or purchased from outside would be chosen. But evidence of early shipbuilding
indicates that communities were not insular. Travel for the purpose of trade was common and
had an impact on the growth of settlements and the way they were governed.

An archaeological site in Tanjay, Negros Oriental (in the Visayas), shows a settlement’s evolution
from before the tenth century to the sixteenth century. In its earliest form, this coastal
community at the mouth of a large river covered less than seven hectares (around fifteen acres).
The excavation of Chinese porcelain from the twelfth century is a sign of early trade, but doesn’t
prove direct contact with China. By the sixteenth century, when the settlement engaged in
metal production, it covered thirty to fifty hectares (roughly one hundred acres). Houses by then
varied in type and size and included one with fortifications— all signs of growing social
stratification. As more goods were imported into coastal settlements, those who controlled the
trade grew in material wealth and status. Not surprisingly, these were the datus who controlled
harbors, collected trade duties, and imported goods. As a class, they were distinguished by their
possession of larger-than average, well-constructed, sometimes stock added houses filled with
such foreign prestige goods as Chinese porcelains, gold ornaments, musical instruments, wood
carvings, and fine silks and cottons (pp. 31-32)

More so, during the 1001 C.E in Butuan, a gold mining and trading center in northeastern
Mindanao, sends its first tribute mission to Sung, China. In the 11th century C.E Sung Dynasty
have become the major trading partner of the Southeast Asian kingdoms, and resulted to the
decline of Srivijaya wherein the trading system became at hands of the Chinese people.
However, during the political change from Sung to Ming Dynasty (1368–1644), Emperor Tai Tsu
limits the interaction among the people of Southeast; thus, the rise of Majapahit Empire had
begun. This Indianized Kingdom became the leading trading master of Southeast Asia (para. 2).
Furthermore, according to Pike (2012) Philippines was part of the profitable trading partners of
the Indianized Kingdom together with China, Vietnam, Burma, Cambodia, and Siam. According
to the the study of Abinales and Amoroso (2005) entitled State and Society of The Philippines,
around 1100 C.E first Malays from Borneo settle in Manila/Tondo and intermarry with native
Tagalogs. In line with this, c. 1275 Arab missionaries and Chinese traders bring Islam to the Sulu
archipelago, this only suggest that in doing economic activities it is not only the products or
goods that traders and merchants used to deliver but also the culture and values (p. xvii).
Hence, during the 1277–1368 Yuan-dynasty trade proliferates with Visayan settlements of Butuan,
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Tanay, and Cebu (Ibid.). Followed by an essential marked on 1368–1424 when Sulu sends six missions to
China during the period of Ming tribute trade to strengthen the relationship among the kingdoms (ibid.).

People of the archipelago during the pre-colonial era displayed similar characteristics among the
nomads of the other parts of the world. These have justified the intellectual and social capacity of man
to cope with the things that are existing in the society. The above presented information was mainly
depicted the Asia’s nationalism (Mehta, 1958), the economic activity that triggers to have an interaction
and shared values among the people. However, being welcoming and hospitable with aliens becomes
one of the considered factors for the islanders to experience the hostility of the so called Colonization.

The Early Colonial Era

This way of looking at the Philippines began with Spanish rule in the early 1500s . The Spaniards
themselves were organized under a highly centralized, autocratic kingship, and when they
encountered datus, they presume that they were perceived as kings in the European context.
They soon realized, however, that a typical datu had only a local following and that there were
many datus competing within a small area. Then they often erred in the other direction, seeing
“no kings or rulers worthy of mention.” In seeking to impose its own state structure and
universal moral code, discussed in the next chapter, Spanish rule nearly succeeded in obscuring
the cultural and political links of the Philippine archipelago with the rest of maritime Asia.

1521 the arrival of Ferdinand Magellan in Mactan, Cebu.

1542 A Spanish expedition to the archipelago bestows the name “Felipinas” in honor of Prince
(later King) Philip II of Spain.

1568 Philip II empowers Miguel Lopez de Legazpi to establish cities and towns and grant his
followers encomiendas.

1571 Legazpi conquers Maynilad, an outpost of the Brunei sultanate. King Philip grants the
new settlement, Manila, the royal title of city.

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1572 The galleon trade begins between Mexico and China, with Manila as transshipment
point.

1595 Philip II decrees Manila the capital of the Philippine Islands.

1609 The polos y servicios (conscript labor) edict is decreed to ensure manpower for public
works projects and naval battles against the Dutch, which continue up to 1648.

1639 A Chinese revolt rocks Manila, led by Christian converts who protest the conscript labor
policy. Revolt spreads to areas south of Manila.

1648 The Spanish sign a peace treaty with the Dutch at Westphalia, recognizing Dutch
independence and ending all attacks on the Philippines.

1660-1661 Revolts erupt in the provinces north of Manila to protest abuse of conscript labor

1700 The Sulu and Magindanao sultanates fight to control trade in the region.

1739 The first viable road system from Manila to northern Luzon opens.

1743 The British step up attacks on Spanish galleons plying the Acapulco–Manila route.

1745 An early revolt over access and control of hacienda lands occurs in Cavite municipality
and Batangas province.

1777 A royal decree orders indios to engage in the production of cotton and other fibers.

1781 Governor-General Basco y Vargas implements the tobacco monopoly, limiting

production to areas designated by the government.

1784 The Philippines remits 150,000 pesos to Madrid, the first remittance since the
establishment of Spanish rule. The first shipment of indigo is sent to Europe.

1785 The Royal Company of the Philippines is established to promote economic development.
The office of cabeza de barangay becomes elective.

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1796 The Astrea, the first U.S. ship to trade in the Philippines, loads indigo, hemp, spices, and
sugar for export.

1807 Spanish deserters revolt in Ilocos to protest the government wine monopoly and
prohibition on the production of basi (rice wine).

1815 Galleon Trade Ends

1834 The Royal Company of the Philippines is abolished. Americans establish two commercial
houses in Manila. A royal decree declares Manila open to international trade.

1853 The British firm Smith, Bell and Company is established in Manila and becomes a major
trader of sugar and hemp.

Source:
Abinales, & Amoroso. (2005). State and Society in the Philippines. State and Society in East Asia Series.
United States of America; Rowman & Littlefield Publishers, Inc. doi:0-7425-1023-9

The economic situation of the Philippine back then was heavily influenced by our Spanish
colonizers. This creates a system which lessens the trade capacity of the country in producing
goods for the neighboring kingdoms and states. The production of surplus goods was mainly
enjoyed by the Mother Land; Spain. However, despite of the disadvantages that the corrupt
officials have done, this brought new set of ideas came from Europe. The lifestyle of the Filipino
was changed from a small villagers and islanders type to conservative and ‘classy’ one.

During 1581, Chinese merchants were compulsory to live in the Parián, a controlled area constructed
outside the exhilarated walls of Manila. Officials could easily gather taxes and restrict trade. Chinese
who established were mandatory in paying a yearly license fee, tribute, and house tax totaling eighty-
one reales , render unpaid labor, and pay occasional capricious taxes.

In addition, Spain’s ambition to regulate the spice trade was a primary reason for retaining the
Philippines, its navy lacked the ability to operate in a distant region and the Dutch won control of

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Maluku. What kept the Spaniards in the Philippines was the value of Manila as a staging post for
religious missions, especially to China and Japan, and as a transshipment point for the galleon trade

The continuous trade from Acapulco to Manila was identified by Mateo (2011) in his study as:

By this name (and other ones, like The nao of Acapulco, the ship from China, etc.) is referred
mainly the communication system between the Vice-kingdom of New Spain (Mexico) and the its
depending colonial territory of the Philippines. The route lasted 250 years, from 1565 to 1815,
crossing the Pacific Ocean in yearly bases, and heavily depending of the geographical conditions.
The first trip was conducted by the Augustinian Fr. Urdaneta, although other ship of the same
expedition commanded by Arellano went back to Acapulco ahead of Urdaneta, as we will
explain later. This galleon brought Mexican and Peruvian silver to Manila which was exchanged
in this entrepôt by Chinese silk arriving there from Fujian and Guangzhou. This route was also
one of the most important ways of East-West communication especially in the 16th and 17th
centuries (p. 1)

Source: Mateo, J. (2011). The arrival of the Spanish galleons in Manila from the Pacific Ocean and their departure along
the Kuroshio stream (16th and 17th centuries) (Doctoral dissertation, National Taiwan University,2011)Journal of
Geographical Research. UMI No. 47:17-38.

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The figure shown above depicts the route of Manila-Acapulco Trade. This was the first crossing
from the Pacific ocean (east to west) and vice versa. More so according to Hecht (2003) The so-
called Manila Galleon (“Nao de China” or “Nao de Acapulco”) brought porcelain, silk, ivory,
spices, and myriad other exotic goods from China to Mexico in exchange for New World silver.
(It is estimated that as much as one-third of the silver mined in New Spain and Peru went to the
Far East.) On the return leg, the precious Asian wares traveled across the Pacific, via the
Philippines (colonized by Spain in the late sixteenth century), to Acapulco on Mexico’s west
coast. They then crossed Mexico overland for shipment to Spain. However, much of the
porcelain and carved ivory remained in the Americas and, in many cases, influenced artists
working there: Mexican ceramics display the impact of the Galleon trade most vividly. But
Chinese silk designs may have inspired some of the patterned garments of Guatemalan
sculptures, whose faces also betray the subtle influence of Asian ivory carvings. Furthermore,
this figure also displaying the routes that have taken by the two Chief during their expedition
with regards to the galleon trade. This trade have brought a lot of things in the country, not just
the products itself but also the cultural value from the origin of the ships. As per mentioned by
the National Commission for Culture and the Arts (NCCA) (2010), as Nick Joaquin noted, “…the
first medium to reduce the world to a village”.

This experience of traveling of the Spaniards from the country to Mexico, gave them new idea
about the currents of the winds such as Habagat and Amihan, in order to navigate back and
forth.

Furthermore, according to Legarda (1999) the reorientation of the colonial economy began with the
arrival in 1778 of Governor-General José de Basco y Vargas, who saw the futility of the galleon trade and
the potential for large-scale production of cash crops for export. He encouraged Spaniards to invest in
the cultivation of spice plants; of silk, cotton, indigo, and hemp; of fruit trees, sugarcane, cacao, and
coconut. He tried to spur local manufacturing to limit the silver drain. And he established the Royal
Company of the Philippines in 1785 to finance these projects and handle the new trade he envisioned
with Europe, other Spanish colonies, and the rest of Asia (pp. 77-88).

Legarda (1999) described the end of the galleon trade as :

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 The last day of the galleon trade—exports of Philippine origin accounted for less than 10
percent of the value of total exports, and many of these were harvested forest or sea
products such as bird’s nest, mother of pearl, tortoise shell, sea cucumber, and timber.
By the 1840s, though, almost 90 percent of total export revenue came from six
Philippine-grown cash crops: sugar, tobacco, abaca (hemp) fiber and cordage, indigo,
coffee, and cotton (pp. 45)
Moreover, Wickberg (1965) have mentioned that in 1834, the company was eliminated, and Manila was
officially opened for trade and residence to merchants of any nationality coming from any foreign port.
At the same time, discrimination against Chinese ships trading at Manila ended; henceforth all ships
were subject to the same levies and processes (p. 48). The latter were British and some American
trading companies that advanced imported goods on credit, allowing Chinese businesses to operate
with little of their own capital (pp. 47-49).

The influence of trading system among the Manila residence and its suburbs was inevitable. It creates
complexities in the way of living of the people, it produces more jobs and opportunities, however, due
to the mismanagement with regards to the self-interest of the Hacienderos and the government; the
income differences among the bourgeois and the poor increases (Merchant, 2009). More so, Phelan
(1959) have described that, in essence, the Spanish introduced private land tenure. As a result, those
chieftains who once administered lands now owned them, with the cultivators under their control. In
addition, Merchant (p. 54) states that by the time estates had become established in the 1620s, they
ranged in size from 15 square miles to 60 square miles; this was a gargantuan area compared to the
average of 0.037 square miles of land owned by native Filipino families. While the native inhabitants
survived on small plots, the Church and private landholders received the bulk of land. Such massive
landholdings allowed individual Spaniards and the Church to reap economic benefits from the leasing of
lands, which they practiced widely, receiving anywhere from 25 to 75 pesos per year in rent by the early
to mid-17th century (1959).

Lastly, Pranav Merchant have concluded that in the first 75 years of the Spanish colonization and trade
regulation was not a successful application of mercantilism for it does not attained to produce more
from the natural resources of the archipelago but with the product being made from China.

In line with the discussion, the 1869- the opening of the Suez Canal. This event has changed the way
Filipino thinks due to the liberal ideas being acquired from Europe carried by the famous French
Revolution. Moreover, this event have lessen the travel time of goods and travelers, thus it provides a
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more convenience for the people. The British and Chinese domination of imports, exports, and
distribution left little scope for Spaniards bereft of managerial experience or capital, and the country
became known informally as an “Anglo-Chinese colony.” (Crushner, 1976).

References:

Abinales, & Amoroso. (2005). State and Society in the Philippines. State and Society in East Asia
Series. United States of America; Rowman & Littlefield Publishers, Inc. doi:0-7425-1023-9
Agoncillo, T. A., & Alfonso, O. M. (1969). History of the Filipino people. Quezon City: Malaya
Books.
Corpuz, O. D. (1997). An economic history of the Philippines. Quezon City: University of the
Philippines Press.
Diamond, J. M. (1997). Guns, germs, and steel: The fates of human societies. New York: W.W.
Norton &.
Guerrero, A. (1971). Philippine society and revolution. Hong Kong: Ta Kung Pao.
Hecht, Johanna. “The Manila Galleon Trade (1565–1815).” In Heilbrunn Timeline of Art History.
New York: The Metropolitan Museum of Art ,2003
http://www.metmuseum.org/toah/hd/mgtr/hd_mgtr.htm (October 2003)

Mateo, J. (2011). The arrival of the Spanish galleons in Manila from the Pacific Ocean and their
departure along the Kuroshio stream (16th and 17th centuries) (Doctoral dissertation,
National Taiwan University,2011)Journal of Geographical Research. UMI No. 47:17-38.
Merchant, P. (2009). Economic Effects of the Spanish Conquest of the Philippines and
Mercantile Theory. Social Sciences. University of Texas, Texas.
Pike, J. (2012). Military. Retrieved October 01, 2016, from
http://www.globalsecurity.org/military/world/indonesia/history-majapahit.htm
Salazar, Zeus A. 1999. Ang Kartilya ni Emilio Jacinto at ang Diwang Pilipino sa Agos ng
Kasaysayan. Bagong Kasaysayan 6.

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Solheim, W. (1959). Introduction to Sa-huynh. Retrieved October 1, 2016, from http://hl-128-171-57-
22.library.manoa.hawaii.edu/bitstream/10125/16640/1/AP-v3n2-97-108.pdf
Tan, S. K. (2008). A history of the Philippines. Diliman, Quezon City: University of the Philippines
Press.
Benito J. Legarda, After the Galleons: Foreign Trade, Economic Change, and Entrepreneurship in
the Nineteenth-Century Philippines (Quezon City: Ateneo de Manila University Press,
1999), 77–88.
Wickberg, Edgar. The Chinese in Philippine Life: 1850-1898. New Haven: Yale UP, 1965. Nicholas P.
Cushner, Landed Estates in the Colonial Philippines (New Haven, 1976), 23-34.
Phelan, John Leddy. The Hispanization of the Philippines: Spanish Aims and Filipino Reponses: 1565-
1700. Madison: University of Wisconsin P, 1959.
Cushner, Nicholas P. Landed Estates in the Colonial Philippines. New Haven: Yale University
Southeast Asia Studies, 1976.

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