Chapter 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:

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

-------+-------------+--------------+-------------+------------------------ | | | | Balance of trade | | | +------------+----------- Year | Imports | Exports | Total trade |In favor of | Against | | | | Islands | 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

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

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

-------------+---------+-----------------------------------------
| Vessels | 1921
| entered +-------------+-------------+-------------
Nationality | and | Imports | Exports | Total
of vessels | cleared | | |
-------------+---------+-------------+-------------+-------------
| | Pesos | Pesos | Pesos
Philippine | 170 | 3,379,522 | 484,817 | 3,864,339
American | 336 | 74,809,502 | 64,206,170 | 139,015,672
British | 740 | 109,387,341 | 60,335,999 | 169,723,340
Chinese | 40 | 499,454 | 325,625 | 825,079
Danish | 3 | ----------- | 1,750 | 1,750
Dutch | 94 | 6,314,435 | 13,203,844 | 19,517,779
French | 8 | 482,434 | ----------- | 482,434
German | ------- | ----------- | ----------- | -----------
Spanish | 13 | 1,304,940 | 5,011,874 | 6,316,814
Swedish | 6 | 17 | 1,788,182 | 1,788,199
Norwegian | 30 | 1,637,253 | ----------- | 1,637,253
Japanese | 319 | 29,169,887 | 20,746,925 | 49,916,812
Mail | ------- | 4,692,363 | 10,125,959 | 14,818,322
+---------+-------------+-------------+-------------
Total | 1,759 | 231,677,148 | 176,230,645 | 407,907,793
-------------+---------+-------------+-------------+-------------

-------------+---------+-----------------------------------------
| Vessels | 1922
| entered +-------------+-------------+-------------
Nationality | and | Imports | Exports | Total
of vessels | cleared | | |
-------------+---------+-------------+-------------+-------------
| | Pesos | Pesos | Pesos
Philippine | 194 | 2,811,668 | 1,344,485 | 4,156,153
American | 367 | 48,873,151 | 83,313,550 | 132,186,701
British | 704 | 79,488,095 | 56,090,093 | 135,578,188
Chinese | 31 | 1,293,429 | 587,691 | 1,881,120
Danish | 2 | ----------- | ----------- | -----------
Dutch | 111 | 6,792,919 | 14,244,306 | 21,037,225
French | 2 | 86,423 | 19,900 | 106,323
German | 16 | 22,002 | 3,003,029 | 2,025,031
Spanish | 12 | 1,272,832 | 1,993,246 | 4,266,078
Swedish | 9 | 41 | 4,031,697 | 4,031,738
Norwegian | 38 | 296,657 | 2,295,116 | 2,591,773
Japanese | 315 | 14,809,799 | 17,520,311 | 52,330,110
Mail | ------- | 4,648,273 | 6,725,172 | 11,371,445
+---------+-------------+-------------+-------------
Total | 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