Note 33 — V. The Nineteenth Century and Economic Development

The second circumstance affecting the growth of a new country is the extent to which the people are able to secure the co-operation of capital from older communities to assist them. There are several ways by which capital may co-operate in the development of a new territory. The first is, where capital in the form of stocks of commodities of all kinds is advanced or sold upon credit by the commercial houses. This has been used in this country. The example of Mr. Nicholas Loney, an Englishman, agreeing to be paid for his sugar machineries with the increased earnings due to the use, by the Filipino planters, of such machines, is a good illustration of how foreign capital could be utilized to advantage by all parties concerned. On the one hand, the planter improved his method of cultivation, thereby increasing his produce, and, on the other, the foreign merchant sold more of his imported machineries, and exported more of the products of the Philippines to his country.33 Furthermore, labor is not without some benefit, for the payment of higher wages is then possible. The second way by which capital may co-operate is by providing transportation facilities to connect a new country with the markets, and especially with those so necessary to its prosperity; for example, by organizing steamboat companies, building important roads, and, above all, constructing railroads. This also was done in this country; the building of the Manila-Dagupan railroad, for example, has had a remarkable influence upon the economic progress of the provinces through which it passed.