Roots of Dependency

2 Anglo-American Merchants and the Development of Commercial Crops

- Sugar technology and manufacturing skills originally came to the Philippines from
China.

- The Chinese built the first crude sugar mills in the Philippines.

- Sugar production led the commercialization of Philippine agriculture.

- Tropical cane production demanded higher levels of capital than other tropical
crops. Philippine producers were linked with the major sources of the capital, the
Anglo-American commercial houses, the only major source of financing.

- after 1800: permanent commercial ties with the West began to develop as more
European traders came to Manila.

- At first, the British were only permited to deal in locally produced commodities
and engage in local trade.

- Most of the philippine overseas trade was with China and Mexico.

- 1814: year of the last galleon from Mexico; permission granted to Europeans to
establish themselves permanently in Manila.

- Presence of English, American, German, and French merchants, causing commercial

impact.

- decade after 1800: sugar production in Pampanga and Pangasinan provinces.

- prior to 1810: most of Luzon's sugar exports went to China, but European merchant
houses were introduced later on. Sugar trade shifted to new European markets.

- By the end of decade, sugar was the leading commercial crop in the Philippines.

- Spain's economic weakness brought false accusations/statements from European

merchants. Raised complaints about unstable law enforcement, administrative slots,
and indifference to the needs of foreign commmunity.

- The negative conditions imposed on the foreigners helped shape Philippine

economic development and create conditions that gave rise to an indigenous ruling
class.

- Spanish policy of the period: reserve as much internal marketing and trade
functions for themselves = Unable to successfully compete with the Chinese

- Restrictions and recommendations were given to the Chinese but to their

annoyance, the trading functions of the Chinese were too important to the overall
economy.

- Rise of sugar: Chinese traders had the middleman role, gathering sugar from Indio
cultivators and transporting it to the Manila where the crude refineries are. After
refining, sugar was sold to the European merchant houses for trans-shipment
overseas.

- The Spanish tried to preserve this trade function for themselves, prohibiting the
Chinese from developing provincial trade. But they weren't able to break the
Chinese hold.
- Chinese control got stronger as sugar developed to an increasingly important
export commodity.

- Until mid-century, sugar production for export centered in the Luzon area, mostly
in the Manila and Pangasinan.

- Even after 1818: sugar remained to be produced in a modest scale compared with
other cane cultures in the world.

- 1820s to 1830s: obstacles such as price flunctuations and changing market

conditions weren't understood by Indio producers.

- 1820s: termination of the galleon trade and founding of important commercial

firms in Manila changed the colony's economic direction.
Mexican Revolution eneded the trade between China, Manila and Acapulco.
Large quantities of local products entered the Philippine export trade,
imports from China fell off

- Domestic exports: forest and sea products like wax, indigo, dried shrimp, and
exotica as bird's nest, tortoise shells, shark fins, and sea slugs - prized Chinese
culinary delights.

- In terms of total trade, agricultural commodities like sugar, abaca, and rice
surged.

- China declined as a market for Philippine goods. Food shortages prompted

increased rice exports from PH.

- late 1820s: seven British and American merchant houses doing business in Manila.
Their close links with cargo shippers and contacts with China, NY, Boston, and
London gave them close ties with major markets for Philippine produce.
Manila merchant houses introduced bills of exchange and letters of credit.
These led to acceptance of funds on deposit, issuance of stock, and full-ranged
banking activity.

- These new developments and introduction of Western merchant banking largely

impacted Philippine economy.

- Merchant houses served as the starter motor in the next major step in commercial
agricultural development in the Philippines.

- Britain and US had greater economic control in PH rather than Spain.

- The decision to accept funds on deposit was a critical factor.

- As capital got accumulated on deposit, merchant houses sought investment outlets

in PH -> first confined to local ventures like shipbuilding -> new outlets were
needed, thus commercial agriculture

- mid-1820s: merchant houses negotiated crop loans and successfully capitalized the
early development of sugar, abaca, and other cash crops.

- Merchant houses became instrumental in encouraging new modes of production and

business organization.
provided initial capital for commercial crop development and offered
facilities for marketing Philippine agricultural products in China and West.
promoted introduction of new products like abaca
encouraged use of modern machinery in sugar milling and opening of new lands
spearheaded introduction of Western consumer goods like textiles and
manufactured products in PH

= bound Philippines much closer to Europe and America and weaken the economic
ties between PH and Spain.

- 1834: Many important developments in merchant banking and commercial agriculture

production were encouraged by the official opening of the port of Manila to the
trade of all nations.

- The British and Americans began to dominate Philippine commerce.