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]

Articles 1921 1922

Pesos Pesos

Beeswax 18,670 3,010

Breadstuffs:

Rice 49,142 58,164

All other 4,941 1,919

Chemicals, drugs, dyes and medicines:

Sapan wood 5,781 16,859

All other 2,674 1,670

Copra 26,146,913 28,206,146

Copra meal 1,208,930 2,435,290

Cotton, vegetable fiber and manufactures of:

Unmanufactured—

Canton 1,342 61,530

Hemp (Manila) 25,969,385 39,081,829

Maguey 1,848,794 2,973,203

Pacol 9,662 1,489

Sisal 28,151 52,585

All other unmanufactured 47,697 133,060

Manufactures of—

Cloth 221,944 24,536

Cordage 918,544 1,099,375

Crochet 15 5,533

Embroideries 10,696,207 6,514,597

Knotted hemp 100,267 904,440

Laces 30,057 17,082

All other manufactures 28,998 103,950

Fish and fish products 175,847 252,912

Fruits and fruit nuts 239,060 532,632

Gold and silver manufactures 4,644 3,787

Gums and resins:

Copal 140,607 127,209

Elemi 7,689 9,266

Gutta-percha 13,466 8,460

Rubber 25,700 ——

All other —— 110

Hats 608,724 950,788

Hides and skins 16,094 27,435

Iron and steel, scrap and old 95,692 28,588

Malt liquors 34,127 28,757

Matches 15,360 33,207

Mineral water 300 ——

Oils:

Coconuts 32,103,036 31,468,971

Ilang-ilang 57,554 60,606

Lumbang or candlenut 161 56

All other 565 220

Pearls, unset 3,444 15

Sesame seed 75,499 3,762

Shells:

Unmanufactured 205,249 286,816

Manufactures of—

Pearl buttons 245,905 418,933

All other 19,141 12,848

Shoes 12,026 5,190

Slippers 16,917 10,867

Soaps 4,860 16,323

Spirits, distilled 57,895 56,796

Sponges 2,575 3,121

Sugar:

Centrifugal 37,175,898 38,628,040

Raw 13,854,586 11,398,580

Refined 6,970 1,138,490

Tobacco:

Leaf 9,522,812 4,546,234

Cigars 6,454,886 11,602,219

Cigarettes 87,530 165,880

Smoking 328,853 674,948

All other 170,353 350,955

Vegetables 5,092 3,471

Wood:

Timber 7,591 10,328

Lumber 1,567,533 1,656,812

Rattan and reeds 615 943

Veneers 75,930 210,222

Basketware 118,802 76,379

Furniture 50,265 48,789

All other 94,978 22,627

All other domestic exports 722,335 635,919

Exports of foreign merchandise 4,465,365 3,951,818

Total 176,230,645 191,166,596

Values of principal articles imported, 1921–1922

[Source: Bureau of Commerce and Industry]

Articles 1921 1922

Pesos Pesos

Animals:

Carabaos 758,862 65,033

Other cattle 3,315,863 1,596,156

Brass, and its manufactures 932,637 454,049

Breadstuffs:

Rice 6,649,395 4,604,315

Wheat flour 7,017,174 5,783,194

Other breadstuffs 1,358,513 1,043,708

Cars, carriages, other vehicles, and parts of:

Automobiles and parts of 7,459,214 1,406,965

Other cars, carriages, etc., and parts 3,345,418 907,856

Cement 2,005,264 1,587,383

Chemicals, drugs, dyes and medicines 3,349,384 2,946,324

Clocks and watches, and parts 508,305 261,504

Coal 6,987,004 5,009,362

Cocoa or cacao 797,527 713,839

Coffee 760,593 880,135

Copper and manufactures of 794,014 190,170

Cotton, and its manufactures 37,648,201 47,229,720

Cotton cloths 25,463,804 34,408,508

Other manufactures 12,184,397 12,821,212

Diamonds and other precious stones, unset 517,893 374,109

Earthen, stone and chinaware 781,366 964,678

Electrical machinery, apparatus, and appliances 4,683,060 1,891,967

Eggs 1,695,605 1,457,923

Fibers, vegetable, and their manufactures 3,507,000 2,331,324

Fish and fish products 2,965,912 2,834,949

Fruits and nuts 2,115,644 1,576,678

Glass and glassware 1,812,285 869,870

Gold, platinum and silver, and their manufactures 378,899 219,618

Hats and caps and parts of 617,369 647,620

India rubber, and its manufactures 3,511,910 2,534,399

Instruments and apparatus:

Not electrical 1,279,204 509,802

Motion-picture, and films for 574,275 600,948

Iron and steel, and their manufactures 43,529,079 15,208,761

Agricultural implements, and parts 700,421 30,572

Machinery and parts 17,665,808 4,022,834

All other iron and steel 25,162,850 11,155,355

Leather, and its manufactures 1,786,461 1,563,939

Meat and dairy products:

Meat products 6,255,609 4,623,158

Dairy products 4,325,411 3,924,896

Musical instruments, and parts 508,349 269,132

Oils:

Crude 954,463 5,337,775

Illuminating 9,014,714 3,476,158

Lubricating and heavy paraffin 3,943,456 655,264

Naphthas, including all lighter products of distillation 8,832,227 3,804,003

All other oils 1,060,068 1,004,899

Paints, varnishes and pigments 966,845 882,485

Paper, and its manufactures:

Books and other printed matter 3,013,988 1,407,916

All other 6,066,029 3,511,832

Perfumery and toilet preparations 1,530,011 1,026,213

Photographic equipments and supplies 446,066 350,949

Plateware, gold and silver 328,300 135,387

Silk, and its manufactures 3,721,538 3,117,454

Soap 710,879 718,802

Spirits, wines and liquors 1,564,629 822,933

Sugar and molasses 984,538 722,910

Tobacco, and its manufactures 4,301,769 2,480,322

Vegetables 2,825,998 2,665,212

Wax 216,893 350,211

Wood, and its manufactures 1,731,758 645,116

Wool, and its manufactures 1,645,701 1,337,484

All other imports 13,284,579 8,858,480

Total 231,677,148 160,395,289

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

Mail —— 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]

MANILA

Year Entered Cleared

1918. 3,782 630,980 3,858 644,831

1919. 3,359 709,980 3,474 723,986

1920. 3,266 845,227 3,452 975,448

1921. 3,210 888,238 3,410 1,090,668

1922. 3,570 1,006,556 3,741 1,293,564

ILOILO

1918. 4,770 357,641 4,755 320,441

1919. 5,317 447,272 5,355 456,308

1920. 6,830 687,828 6,818 625,746

1921. 6,699 755,521 6,708 667,506

1922. 6,822 878,074 6,843 806,642

CEBU

1918. 5,625 357,523 5,645 327,196

1919. 5,386 432,007 5,562 437,896

1920. 4,947 560,925 5,029 464,791

1921. 5,157 634,904 5,170 465,355

1922. 5,713 967,494 5,800 656,828

ZAMBOANGA

1918. 831 158,116 859 165,043

1919. 1,161 207,992 1,168 215,233

1920. 1,520 231,060 1,533 224,499

1921. 1,515 219,732 1,520 242,201

1922. 1,272 278,481 1,280 303,311

ALL OTHERS

1918. 138 31,430 137 30,983

1919. 185 49,787 182 47,578

1920. 175 36,665 179 36,365

1921. 153 42,893 150 42,577

1922. 177 50,093 182 50,218

TOTAL

1918. 15,146 1,535,690 15,254 1,488,494

1919. 15,408 1,847,038 15,741 1,881,001

1920. 16,738 2,361,705 17,011 2,326,849

1921. 16,734 2,541,288 16,958 2,508,307

1922. 17,554 3,180,698 17,846 3,110,563