XI. The Trade of the Philippine Islands
Background The Philippines are practically alone among tropical countries in having, through a fortunate chain of historical circumstances, a population advanced in civilization and able to become a part of the complicated organization which modern commerce demands. The business machinery of collecting the products from the plantations and getting them to Manila has long been in the hands of Filipinos and in this they are rarely assisted financially by Americans or foreigners. In connection with man power, however, there is a problem very difficult to solve—the scarcity of manual labor—the population of the Islands being insufficient to till their fertile acres and get their products ready for commerce. Probably only time can remedy this.
The stability of the Government of the Islands during a time of growing Filipino participation is a proof to the world that when the time comes for the government to be entirely in the hands of the Island’s inhabitants, both as to internal and external affairs, foreign commerce need not fear for loss of credit or trade, due to any of the great political upheavals which have been so common in other countries which were once colonies but are now independent.
Trade Routes ECONOMIC POSITION.—Lying within thirty-six hours’ sailing from the port of Hongkong, the Philippine Archipelago bears promise of being an important distributing center for goods destined for the markets of the Far East. The ports and harbors have exceptional advantages of anchorage, and port facilities are easily obtained. The islands are close to the main trade route between America and Europe, via the Pacific. They are also close to the route from the extreme Orient to Europe and to the route from the ports of southern Asia to the two Americas. Furthermore, they lie on one of the most promising trade routes between Australia and Asia. Manila, however, is in competition with such ports as Hongkong, Singapore, Saigon, and Batavia, which are in most respects better situated especially for European trade. As regards American bound traffic, however, Manila has the advantage. Feeder lines are actually operated from Singapore to Manila and Zamboanga, and from Batavia to the ports of Mindanao. For goods coming from the United States for the east, direct sailings are conveniently made from the Pacific coast of Canada to the ports of the Philippine Islands, where transhipments can be made for any of the ports of Asia, Japan, India, Singapore, the Dutch East Indies, and even Australasia.
Filipino capital The port of Manila has now a marine terminal that can compare favorably with any in the Orient. There are three piers provided with modern conveniences, and there is a good-sized basin inclosed with strong breakwater. If the development of the Philippine resources, however, should in the future proceed as rapidly as the development during the last decade, and if shipping opportunities generally in the East are taken advantage of, there will be need for a still larger marine terminal and for efficient ship-repairing and dry-docking facilities. But there will always be available sites on Manila Bay.
To emphasize the importance of Manila as a trade center, attention is drawn to the chart of page 146 where a circle, drawn with Manila as a center and having a radius of 1,700 miles, will comprise within its circumference no less than 20 cities of equal importance and would reach a population of no less than 125,740,711, while a radius of 3,500 miles would make the circumference of the circle reach into the interior of Siberia and China to the north, all of India and Colombo to the west, and about two-thirds of Australia to the South.
Filipino capital THE PERSONNEL OF PHILIPPINE COMMERCE.—Before the coming of the Spaniards, the Filipino people were known traders, their interisland life leading naturally to a use of the sea as a means of communication. During the eighteenth and nineteenth centuries trade was controlled by the Spanish residents. The result of limited Filipino participation was a disinclination, through lack of knowledge and practice, to engage in trade, and it is only within the last few years that Filipino business men have been an appreciable factor. Dozens of enterprising and well-educated young men are now venturing into business. Filipino capital has hitherto been invested in great estates; the millionaires of the Islands with few exceptions have obtained their incomes from rentals and produce. All that is rapidly changing; oil companies, shipping firms, and importing houses are now financed by Filipino capital and managed by Filipino brains; but Filipino participation in the trade of their country has not yet assumed commanding proportions.
Foreigners The people of all the great trading nations have established houses in Manila and have a vital part of the Islands’ commerce, transacting a considerably greater proportion of the foreign trade. Of these, Americans are, of course, the most numerous, having as a basis the political bond between the two countries. A large part of these are ex-Government employees, who saw the opportunities for business development during their terms of service in the Insular Government.
The British probably occupy second place, though the Spaniards and their descendants in the Islands are important factors, their houses handling every branch of import and export trade. The British firms are for the most part long established, and their trade has the strong aspect characteristic of British trade the world over. They specialize in the export of the staples hemp, sugar, and tobacco. The French and Swiss have houses, which were here prior to American occupation. The Japanese are a new element; they have of late been invading every branch of commerce, with increasing momentum. Millions of Japanese capital are being invested in the basic industries of the Islands, and each month sees the incorporation of new companies. The post-war depression, however, has reduced their number and commercial activities very materially.
AMERICA’S MONOPOLY IN PHILIPPINE TRADE.—The old saying that “trade follows the flag” has held true in the Islands. At the time of the American occupation a very small portion of the Islands’ commerce was with the United States; now it is about two-thirds, seven times that of any other country.
In the beginning, the growth was slow, and what growth there was, was due to the increasing American civil population. The few American houses were young and struggling with inexperience and lack of capital. The older foreign houses, with their branches in the provincial centers and established clientele, had a very strong hold on import trade.
Effect of Free Trade In 1909 a tariff law providing for reciprocal free trade between the United States and the Islands was passed, with a few limitations which were removed in 1913. Immediately following the passage of this law American goods sprang to the fore and trade increased threefold from 1909 to 1912, $24,000,000 worth having been imported in that year.
MEDIUMS OF TRADE.—Generally speaking, there are three methods by which goods coming from foreign countries are brought to consumers in the Archipelago.
Some manufacturers establish branches throughout the Islands and sell only their particular line. For others having a smaller volume of trade various commission and indent houses stand ready to handle their goods together with other lines. Still other manufacturers having a large volume of business in the Islands transact business thru a branch or agent direct without any intermediary.
TRADE WITH OTHER COUNTRIES.—The following table shows the volume of trade between the Philippines and the other countries of the world for the years 1917 to 1922:
Total trade (imports and exports) by countries for the years ended December 31, 1917–1922
| Countries | 1922 | 1921 | 1920 | 1919 | 1918 | 1917 |
| Pesos | Pesos | Pesos | Pesos | Pesos | Pesos | |
| United States | 223,699,852 | 248,973,616 | 395,012,081 | 264,288,213 | 295,932,059 | 201,710,012 |
| Hawaii | 1,199,666 | 2,404,761 | 4,310,625 | 4,584,195 | 958,872 | 968,859 |
| Porto Rico | 159 | |||||
| Guam | 279,929 | 344,211 | 223,304 | 198,134 | 522,822 | 208,494 |
| United Kingdom | 16,788,965 | 17,892,548 | 34,559,572 | 37,111,249 | 44,492,810 | 26,532,640 |
| Austria-Hungary | 298,425 | 353,670 | 23,305 | 391 | 1,633 | 2,063 |
| Belgium | 1,187,310 | 719,089 | 812,910 | 915,390 | 474 | 43,606 |
| Denmark | 49,800 | 86,745 | 103,098 | 36,667 | 40,810 | 87,417 |
| France | 4,519,468 | 7,812,258 | 5,828,482 | 11,423,798 | 4,097,446 | 4,506,617 |
| Germany | 7,934,643 | 7,429,125 | 2,787,824 | 733,882 | 65,215 | 321,879 |
| Italy | 984,018 | 469,804 | 663,707 | 337,104 | 378,305 | 427,312 |
| Netherlands | 5,670,345 | 10,859,875 | 7,292,425 | 17,213,031 | 90,927 | 176,910 |
| Spain | 7,467,255 | 9,548,425 | 12,878,951 | 9,728,135 | 7,860,335 | 4,881,013 |
| Norway | 124,795 | 39,105 | 10,539 | 37,610 | 15,475 | 29,858 |
| Switzerland | 1,510,333 | 1,875,403 | 1,890,888 | 1,347,920 | 1,215,741 | 1,120,127 |
| Canada | 2,320,070 | 1,236,079 | 2,007,190 | 481,439 | 1,400,341 | 1,119,188 |
| China | 17,786,205 | 24,054,116 | 25,915,481 | 21,884,855 | 19,652,486 | 12,839,167 |
| Japanese-China | 748,000 | 317,378 | 90,597 | 435,731 | 221,431 | 339,971 |
| British East Indies | 4,558,247 | 5,373,683 | 9,645,447 | 7,592,592 | 7,031,771 | 4,339,107 |
| Dutch East Indies | 5,569,494 | 5,813,437 | 5,524,312 | 8,242,028 | 2,662,846 | 2,490,819 |
| French East Indies | 6,191,832 | 6,516,898 | 10,226,884 | 10,456,432 | 16,560,839 | 11,309,048 |
| Hongkong | 5,664,825 | 10,146,269 | 14,960,216 | 14,882,990 | 10,129,983 | 11,154,093 |
| Japan | 28,964,902 | 35,094,966 | 47,064,272 | 37,285,086 | 42,144,920 | 31,088,379 |
| Siam | 466,336 | 4,196,598 | 8,733,450 | 2,637,467 | 2,439,348 | 753,449 |
| Australasia | 7,105,550 | 5,835,955 | 10,199,782 | 10,668,854 | 8,873,767 | 5,977,807 |
| British Africa | 50,936 | 72,990 | 145,457 | 402,018 | 161,063 | |
| French-Africa | 35,975 | |||||
| All other countries | 348,663 | 249,812 | 845,106 | 384,283 | 213,776 | |
| Totals | 351,561,885 | 407,907,793 | 601,124,276 | 463,513,756 | 467,587,387 | 322,802,674 |
The values of imports and exports and the trade balance for each year, from 1913 to 1922, follow:
Values of imports and exports, and total volume of trade, showing balance for each year, from 1913 to 1922
[Excluding gold and silver ore, bullion and coin]
| Year | Imports | Exports | Total trade | Balance of trade | |
| In favor of Islands | Against Islands | ||||
| Pesos | Pesos | Pesos | Pesos | Pesos | |
| 1913 | 106,625,572 | 95,545,912 | 202,171,484 | —— | 11,079,660 |
| 1914 | 97,177,306 | 97,379,268 | 194,556,574 | 201,962 | —— |
| 1915 | 98,624,367 | 107,626,008 | 206,250,375 | 9,001,641 | —— |
| 1916 | 90,992,675 | 139,874,365 | 230,867,040 | 48,881,690 | —— |
| 1917 | 131,594,061 | 191,208,613 | 322,802,674 | 59,614,552 | —— |
| 1918 | 197,198,423 | 270,388,964 | 467,587,387 | 73,190,541 | —— |
| 1919 | 237,278,104 | 226,235,652 | 463,513,756 | —— | 11,042,452 |
| 1920 | 298,876,565 | 302,247,711 | 601,124,276 | 3,371,146 | —— |
| 1921 | 231,677,148 | 176,230,645 | 407,907,793 | —— | 55,446,503 |
| 1922 | 160,395,289 | 191,166,596 | 351,561,884 | 30,771,307 | —— |
Values of principal articles exported, 1921–1922
[Source: Bureau of Commerce and Industry]
Values of principal articles imported, 1921–1922
[Source: Bureau of Commerce and Industry]
Because the products of the Islands are usually exported to the countries where the imports come from, there have been established firms which deal in exports and imports of every variety, and have buying and selling organization both in the Islands and abroad. This double business, so to speak, besides being very profitable, lends itself to large scale enterprises and millions of capital have been brought together under one managing head.
SHIPPING.—The foreign, as well as the domestic trade of the Philippines, will always depend on an adequate supply of shipping. As fast as the agriculture and industries of the Islands develop, the supply of shipping must correspondingly increase, otherwise, the commercial development of the Islands will be retarded. Hemp, oil, and sugar are bulky and the surface they require when exported is large in proportion to their value. Practically, all Philippine goods are carried thousands of miles before they reach their destinations, either to New York or London and the continent—half way around the world. Because of this, reasonable wages and a regular supply of surface for cargo in the ships calling at the ports of the Islands are indispensable. Because of this, also, it is necessary for the Islands to have a merchant marine of its own in order that products therefrom can be easily transported to the markets of the world.
INTERISLAND TRANSPORTATION.—Water transportation is the key to the interisland trade of the Islands. For hundreds of years before the coming of the steamboat, the Philippine seas were dotted with small sailboats of every description, made out of a log, or of rough hewn planks surmounted by a sail made from abaca cloth. They were manned by sturdy, courageous voyagers inured to hardships, who dared to go forth even into strange oceans, through typhoon and tempest.
The following table shows the entrances and clearances of vessels in the Philippine Islands by nationalities during 1920–1923:
Aggregate value of merchandise carried by vessels engaged in foreign trade, by nationality
[Source: Bureau of Customs]
| Nationality of vessels | Vessels entered and cleared | 1921 | Vessels entered and cleared | 1922 | ||||
| Imports | Exports | Total | Imports | Exports | Total | |||
| Pesos | Pesos | Pesos | Pesos | Pesos | Pesos | |||
| Philippine | 170 | 3,379,522 | 484,817 | 3,864,339 | 194 | 2,811,668 | 1,344,485 | 4,156,153 |
| American | 336 | 74,809,502 | 64,206,170 | 139,015,672 | 367 | 48,873,151 | 83,313,550 | 132,186,701 |
| British | 740 | 109,387,341 | 60,335,999 | 169,723,340 | 704 | 79,488,095 | 56,090,093 | 135,578,188 |
| Chinese | 40 | 499,454 | 325,625 | 825,079 | 31 | 1,293,429 | 587,691 | 1,881,120 |
| Danish | 3 | —— | 1,750 | 1,750 | 2 | —— | —— | —— |
| Dutch | 94 | 6,314,435 | 13,203,844 | 19,517,779 | 111 | 6,792,919 | 14,244,306 | 21,037,225 |
| French | 8 | 482,434 | —— | 482,434 | 2 | 86,423 | 19,900 | 106,323 |
| German | —— | —— | —— | —— | 16 | 22,002 | 3,003,029 | 2,025,031 |
| Spanish | 13 | 1,304,940 | 5,011,874 | 6,316,814 | 12 | 1,272,832 | 1,993,246 | 4,266,078 |
| Swedish | 6 | 17 | 1,788,182 | 1,788,199 | 9 | 41 | 4,031,697 | 4,031,738 |
| Norwegian | 30 | 1,637,253 | —— | 1,637,253 | 38 | 296,657 | 2,295,116 | 2,591,773 |
| Japanese | 319 | 29,169,887 | 20,746,925 | 49,916,812 | 315 | 14,809,799 | 17,520,311 | 52,330,110 |
| —— | 4,692,363 | 10,125,959 | 14,818,322 | —— | 4,648,273 | 6,725,172 | 11,371,445 | |
| Total | 1,759 | 231,677,148 | 176,230,645 | 407,907,793 | 1,801 | 160,395,289 | 191,166,596 | 351,561,885 |
Not until the coming of the cargo steamer, however, could the bulky products of the Islands be gathered together in large quantities and become an important factor in the world’s commercial necessities. Every portion of the Islands is now covered by steamers, plying regular routes.
Interisland Lines To the north a route leads to Aparri, the outlet from the fertile Cagayan Valley, a tobacco country, where thousands of hectares of rich unoccupied prairies await only the touch of capital. To the southward are the main channels of trade. Cebu is the metropolis of the Southern Islands, and to this port come the hemp and copra of all the Visayas, there to be transferred to Manila. Some ocean liners load direct at Cebu for the homeward voyage, saving the haul to Manila. Cebu harbor accommodates vessels of 30-foot draft, which can anchor at the sea wall, close to the warehouses of the principal commercial houses. From Iloilo comes the sugar of Negros and Panay. Here, too, is a harbor of sufficient depth to allow ocean vessels of fair tonnage to load. Ships of the Spanish lines in particular are accustomed to procure their cargoes here and omit Manila. Commercial routes encircle Mindanao, drawing from it copra and hemp, and supplying in return cotton cloth, canned goods, rice, and other commercial staples. Smaller vessels ply between the Bicol provinces, Masbate, Leyte, and Manila, carrying hemp principally.
Control over Rates The steamers of the Philippine Islands are not allowed to charge the prices “the traffic will bear,” without any recourse by shippers. The Public Utility Commission fixes the maximum rates for all classes of traffic and for all ports of the Islands. In this way the interests of the producing and consuming public are protected, and destructive rate wars between shipper and carrier and among the several companies are avoided.
The number and tonnage of vessels engaged in domestic shipping are as follows:
Number and registered tonnage of vessels engaged in domestic shipping, by ports of entry, 1918–22
[Source: Bureau of Customs]