fradera historialoriginsphilippineeconomy 2004

7/25/2019 Fradera HistorialOriginsPhilippineEconomy 2004

http://slidepdf.com/reader/full/fradera-historialoriginsphilippineeconomy-2004 1/14

Australian Economic History Review, Vol. 44, No. 3

ISSN 0004-8992

© Blackwell Publishing Asia Pty Ltd and the Economic History Society of Australia and New Zealand 2004

307

November 2004

Blackwell Science, LtdOxford, UKAEHRAustralian Economic History Review0004-89922004 Blackwell Publishing Asia Pty Ltd and the Economic History Society of Australia and New Zealand

November 2004443307320Original Article

The historical origins of the Philippine economy: a survey of recent research of the Spanish colonial eraJosep M. Fradera

THE HISTORICAL ORIGINS OF THE PHILIPPINEECONOMY: A SURVEY OF RECENT RESEARCH OF THESPANISH COLONIAL ERA

B

J

M. F

Universitat Pompeu Fabra, Spain

This article surveys recent research of the Spanish colonial era in

the Philippines since the late eighteenth century. While highlighting imperfections in our understanding, the article establishes the

parameters with which the Philippine economy entered the twentieth

century. It outlines the intensification of Spanish colonial rule

through changes in the taxation system, particularly the expansion

of forced tobacco cultivation until its abolition in 1882. Since then,

the Spanish set out to further change and intensify colonial rule but

contradictions in the system of colonial rule caused the effort to

come to an abrupt end in 1898.

INTRODUCTION

The taking of Manila by the English in 1762 was a fundamental moment of

historical change in the archipelago of the Philippines.

1

In terms of economic

growth, it is not easy to establish the true importance of the two-year British

occupation, as we are not yet in a position to measure the state of the Philippine

economy at that time. However, there is little doubt as to its impact on Spanish

imperial policy.

2

The capture of Manila profoundly affected the institutionalframework in the country, particularly areas concerning military, fiscal and cus-

toms matters.

This brief essay will refer to this set of changes as a way of approaching the

origins of modern economic growth in the Philippines during the nineteenth and

early twentieth centuries. The essay seeks to establish this important point on the

basis of available studies, although it must be pointed out that this approach is

not always sufficient to resolve some of the main questions.

3

In doing so, the essay

provides a brief survey of the economic historiography of the Philippines.

1 On the invasion, see Cushner, Documents

.2 Concerning the Spanish presence in the Philippines before the nineteenth century, the most

important book continues to be that of Phelan, Hispanization

.3 For an approach to Philippine historical literature, see Larkin, Perspectives

.



308

Josep M. Fradera


CHANGE IN THE LATE EIGHTEENTH CENTURY

The British invasion in 1762 was not the first foreign aggression in this remotest

of Spanish possessions. In the first half of the seventeenth century, several attacks

by the Dutch had made the Spanish aware of how difficult it was to administer

such a distant possession.

4

To sustain the defence of the country, peasants in

various parts of the Philippines were forced to work for the imperial army and

navy through a system of corvée

labour, which would last well into the nineteenth

century. The Dutch threat was a very serious one, since the Dutch East India

Company not only had a powerful navy, but forged alliances with the Malay

sultanates in the south of the Philippines, in Mindanao.

5

The difference between

those seventeenth century attacks and the assault by the British East India Com-

pany is that the latter attack was successful in terms of both effectiveness and ease.

Moreover, it acted as a catalyst for the discontent of the social groups subjugated

by the Spanish, in particular the Chinese minority in Manila and large sectors of

the peasant population of the Tagala area and Pangasinan.

6

The outcome of these

factors was an unprecedented crisis, which forced the Spaniards to radically

rethink their political and economic position in Asia. The ensuing change in their

colonial policy had great consequences, both internally and for the relationship

of the archipelago with the international economy.

The rural population in the areas controlled by the Spanish were most affected

by the change in priorities of the Spanish administration. During the rest of

the eighteenth century, the colony’s fiscal policies were drastically reformulated.

The aim was to provide resources essential to improving the fortifications and the

Spanish military organisation in the colony. To this end, the mechanism to collect

the cédula

(head tax) was expanded to provinces and localities that had hitherto

been under largely nominal colonial administration, and the list of taxes was

consolidated. At the same time, a system of fiscal monopolies was established

which affected important popular objects of consumption, including local spirits

and tobacco. Particularly revenues from the tobacco monopoly increased faster

than what even the Spanish themselves had expected, as a study by De Jesús

shows.

7

During 1782–1820, the fiscal monopolies developed around the capital–

port, especially on the island of Luzon, but in subsequent decades they gradually

covered the entire archipelago. The taxes on consumption demonstrated, in the

short term, a high elasticity in terms of their contribution to the colonial treasury.

Nevertheless, this greater fiscal pressure led to growing rural discontent and

significant anti-colonial uprisings, at least until the second decade of the nine-

teenth century.

8

4 There is a general synthesis of all of this in Cushner, Spain in the Philippines

.5 Laarhoven, Triumph of Moro Diplomacy

.6 Routledge, Diego Silang

; Cortes, Pangasinan

.7 De Jesús, Tobacco Monopoly

.8 Sturtevant, Popular Uprisings

.



The historical origins of the Philippine economy: a survey of recent research of the Spanish colonial era

309


The extraordinary growth of the resources derived from personal taxes had an

impact on the peasantry and also on the organisation of the archipelago’s foreign

relations. Until the mid-eighteenth century, the main trade line that linked the

Philippines with the outside world was the official one between the capital–portof Manila and Acapulco, in present-day Mexico and the port of Canton in China.

9

It was an old transoceanic route established in 1600 and used for trading Latin

American silver from Peru and Mexico for Chinese silk and Southeast Asian

spices.

10

The trans-Pacific route was in decline, even though it continued to be

important in the context of the changes that occurred in the latter half of the

eighteenth century.

11

First, it played a significant role in financing Spain’s domi-

nation of the Philippines. The customs duties that entered the Manila treasury

were crucial for maintaining the military in the colony.

Second, commerce between the Philippines and China was the only area of foreign trade in the Spanish empire in which foreign navies participated. In the

past, the merchant vessels in the trade between the Philippines and China or

Southeast Asia had been exclusively Asian, until after 1750 the navies of European

countries increased their share in the trade and Asian ships under flags of conve-

nience started to carry European goods. This helps to explain why the port of

Manila was already highly internationalised before the further liberalisation of

foreign trade of the Philippines during the nineteenth century.

12

Adding to the

complex trade relationships was an attempt by the Bourbon dynasty to organise

a chartered company capable of guaranteeing direct communications betweenSpain and its Asian possession via the Cape of Good Hope.

13

Founded in 1785,

the Compañía de Filipinas

failed in its aim to transform the economy of the Philip-

pines and guarantee a regular alternative route, but it contributed to diversify

Manila’s foreign relations.

At the beginning of the nineteenth century, the weakening relationship with

Mexico was compensated by trade with Southeast Asia, British India and China.

The relationship with China in particular became more dynamic due to its opium

trade. The existence of this multilateral foreign trade, albeit of a reduced volume,

was vital for the growth of public revenue from the colonial tax system.

14

Bothpersonal tax collection and consumption of products from fiscal monopolies were

supported by the development of commercial agriculture, rural savings and the

opportunity to monetise the savings. The modest foreign trade surplus was vital

for ensuring a steady inflow of coins for circulation so that an increase in tax

9 Schurz, Manilla Galleon

.10 Tepaske, New world silver.

11 On the last stage of trading with Asia in these conditions, the following two articles should benoted: Cheong, Changing the rules; Cheong, Decline of Manila.

12 Reed, Colonial Manila

.13 Díaz Trechuelo, La Real Compañía

.14 Bauzon, Deficit Government

.



310

Josep M. Fradera


revenues would not substantially increase the pressure of taxation in the still

largely unmonetised economy and lead to social crises.

15

The colonial restrictions and pressure on the rural areas did not prevent the

emergence of a modest agrarian middle class in the hinterland of the port of Manila. Little is known about the mechanisms and foundation for the rise of this

class, but a few hypothetical explanations can be given. On some occasions, it was

the modest development of capitalism of a provincial nature, on other occasions

it followed essentially ethnic lines. In some cases, it was supported by mechanisms

guaranteed by the colonial power (e.g. control over rural labour and the commu-

nity funds of the municipalities), and in others, it was not like this at all. Larkin

contrasts the formation of an active agrarian middle class in Pampanga, a prov-

ince of plains, but not among the Tagalog people around Manila, an area settled

by the Spanish for the purpose of producing rice supplies for Manila.

16

In thelatter case, the mix of variables in the process was complex, and all variables

interacted, both provincial and related to ethnic differentiation. In addition, in its

interior, a very dynamic mestizo population, the Chinese-Philippine segment,

asserted itself. Using the mechanisms of local power provided by the Spaniards

(the so-called principalía indígena

), it had convenient and easy access to both land

and peasant labour.

17

On other occasions, the State’s new fiscal policies completely

clashed with the interests of the traders of alcohol (from sugar cane) and tobacco,

who were forced to abandon those activities.

Third, there was the whole web of economic activities in the Philippines relatedto the economic foundation of the imperial system itself. The first element of that

web is groups of traders in Manila with interests in the trans-Pacific system. Some

were from Acapulco or Mexico City, as a natural result of more than two centuries

of monopolistic trade. Others were Spaniards, who the state had rewarded with

boletas

(licenses) which allowed them to ship cargo in authorised vessels. Some of

them worked for themselves, while many others were little more than intermedi-

aries for the institutions that provided credit, particularly the ‘sacred works’ of the

powerful Catholic church in the Philippines.

Finally, there were the alcaldes mayores

(provincial mayors) or those who had heldthat office (the most important of provincial offices, with an average duration of

six years). Thanks to their position, they used corvée peasant labour assigned by

the state for different economic activities and for their own personal enrichment.

The alcaldes mayores

were the government’s agents in the provinces, but at the same

time they were obliged to guarantee the trade of food from the interior to Manila.

Along these different paths, without the emergence of a recognisably dominant

sector, this proto-middle class formed itself. By the mid-nineteenth century, the

seeds of a relatively powerful social sector had taken root, at a time when the

changes in the interior of the Philippines and in the country’s relationship with

15 For everything relating to Philippine foreign trade, one should consult Legarda, After the Galleons

.16 Larkin, Pampangans

; Larkin, Sugar

.17 Wickberg, Chinese mestizo.




311


international trade gave the archipelago an important role in the region’s

economy.

IMPACT OF FISCAL MONOPOLIES IN THE NINETEENTH CENTURY

Despite the emergence of a proto-middle class, the most dynamic element in

Philippine economic and social development until the mid-nineteenth century

was the state sector. The development of its fiscal monopolies was the fundamental

condition for the continuity of Spanish colonial power in the archipelago and it

was primarily the revenues from tobacco that guaranteed the fiscal resources

necessary to sustain the Spanish presence after the transoceanic system collapsed

during 1810–15. From then until 1882, the fiscal monopolies sustained the admin-

istration of the colonial state, but now outside the imperial context in which it

had been embedded for more than two centuries.

18

This fact explains the deter-

mined Spanish action to develop these monopolies, particularly the tobacco

monopoly. It also resolves an issue that has not been fully understood in the

historiography; why a fiscal arrangement with such high collection costs was at

the same time so decisive in internalising the costs of the colonisation of the

archipelago.

The expansion of the fiscal monopolies enabled the intensification of Spanish

colonial rule over the Philippines during the nineteenth century. The old borders

in the interior – in the centre of the island of Luzon and in the south of the

archipelago, in Mindanao and Sulu – receded little by little as a very elementary

colonial system, consisting of a combination of fiscal monopolies, personal taxa-

tion and military domination, expanded. The Muslim sultanates to the south lost

control over large areas, which they had since the late eighteenth century, thanks

to British protection, as British traders acquired important products from the

sultanates for the Chinese market. Their enslaving activities in the Visayas

decreased and with it the system of production that had sustained the sultanates.

19

The spread of the system of fiscal monopolies to the Visayas was a key element

in the race to colonise the Philippines, which the Spaniards had postponed for

centuries due to scarce resources and priorities that had focused on guaranteeing

transoceanic trade.

The most important medium-term effect of Spanish fiscal policy was indirect

and unintentional. The growth of the fiscal monopolies (particularly tobacco and

spirits) generalised a complex system of division of labour among different prov-

inces on the island of Luzon and, after the 1850s, in the Visayas. This was the

main result of the so-called colecciones

: land reserved for the production of tobacco

using compulsory labour, with peasant workers receiving payment, but at a set

rate established by the local colonial authorities. An important event was the

18 Fradera, Filipinas

.19 On these political entities, see Warren, Sulu Zone

; Warren, Iranun and Balangigi

.



312

Josep M. Fradera


establishment of the large colección

in the Cagayan River Valley, in northeast

Luzon, after 1830.

20

A political decision was made to remove subsistence produc-

tion of palay

(rice) from some provinces for the production of export crops, while

others were designated to become primarily rice-growing. The expectation wasthat increased export earnings would facilitate an increase in imported goods for

all. This production-integration design – or the formation of an internal market

– was only possible to the degree that the state arranged a reasonable level of

monetisation of the rural economy. In effect, without a sufficient supply of money,

the fiscal monopolies could not pay crop growers and labourers in the processing

factories in Manila, nor could markets for consumer products grow. However, the

division of peasant labour that served as their basis was viable.

In the medium term, the degree of monetisation of the inland Philippine

economy depended on the degree to which its products found internationalmarkets. The Spanish administration was aware of the connection between fiscal

policy and its commercial and monetary implications.

21

The high-ranking civil

servants in the Manila government never hid their admiration for similar formulas

in the British colonies of Australia or in colonial Java. Those were the fundamental

points of reference in the 1850s and 1860s, despite notorious differences between

the systems in both. To further the internationalisation of the archipelago’s econ-

omy, the Spanish authorities moved in two parallel directions. They almost com-

pletely liberalised Manila’s foreign trade in 1834 and in the Visayas in 1855. The

latter, particularly the island of Negros, had become a prominent sugar-producing area by the mid-nineteenth century.

22

The opening up of trade cannot be sepa-

rated from the decision to extend the tobacco monopoly to the Visayas. Nor can

it be separated from other developments: the growth of exports of agricultural

products; an increase in imports of British textiles; and the deindustrialisation of

textile production area, as McCoy showed.

23

Second, the Spanish administration

organised auctions in Manila to sell monopoly tobacco destined for the interna-

tional market. The quality and price of Philippine tobacco attracted many British,

Dutch and American trading houses to the Philippine capital, with the result that

they established themselves firmly in the archipelago’s business world.

DEVELOPMENT OF AN EXPORT ECONOMY SINCE THE 1850s

In the mid-nineteenth century, the connections between the economic activities

of the state, the international trading houses, and the emerging Philippine business

groups in the provinces where export crops were grown, is the most notable result

of the nascent capitalism in the Philippines. One of the best-known cases of this

20 On the tobacco levy and the Cagayan Valley, see the brilliant studies of De Jesús, Tobacco Monopoly

and Control and compromise.21 Fradera, Opio y negocio; Gamella and Martín, Las rentas del anfión.22 Aguilar, Beyond inevitability.23 McCoy, A queen dies slowly; Resnick, Decline in rural industry.




313


expansion is the production and export of Manila hemp, a plant fibre vital for

the merchant navies of many countries. Owen gave a very detailed description of

the characteristics of this sector and of the social groups that grew with it.

24

On

many occasions, the most solid nucleus of the Philippine middle class had a verypronounced ethnic characteristic: Chinese or Chinese-Philippine. Until the 1850s,

restrictions on the mobility and immigration of the Chinese contributed to main-

taining an important and hardly discussed role for the mestizos de Sangley

minority,

the social group that would most enthusiastically claim the concept of ‘Filipino’

ethnicity for itself, as opposed to the majority of local ‘Indians’ and also the

Spanish colonisers.

25

From this time on, they competed with a minority of genuine

Chinese.

26

Case studies demonstrated the crucial function of both groups in the

main cities or in credit activities in rural areas, as occurred in the tobacco regions

under state control.

27

The model of development described thus far, with important roles for the

colonial state and a dynamic middle class involved in export industries, contains

a contradiction that surfaced during 1875–85. In the Philippines, the Spanish had

found a successful response to the break-up of the Spanish empire: fiscal monop-

olies and the unstoppable progression of tax collection on the basis of sustained

population growth and expansion of the area where tax was collected.

28

As the

fiscal monopolies taxed consumption, the development of native Filipino business

was not impeded. The problem stemmed from the fact that the Philippines were

a colony and subject to the exploitative intentions of its metropolis.From the mid-1830s, the government in Spain sought to benefit from the

successful tobacco monopoly, based on the quality and apparent very elastic

supply of tobacco for both local and international markets. Encouraged by the

flagging public finances in the metropolis, it began to demand increasing supplies

of tobacco from the colony for sale for the benefit of the government in Spain.

29

The financial burden on the colonial administration increased to the extent that

it was forced to suspend the alcohol monopoly in 1863 and pay rural tobacco

producers with paper vouchers in the absence of coins. This burden imposed by

the metropolis encouraged deep rural discontent that evolved into banditry(

tulisanismo

) in some areas, and finally to the decline of income for the colonial

administration. In the 1870s, it became clear that the tobacco monopoly was

inefficient, corruption-ridden, a burden on the rural population and a source of

popular discontent.

In 1882, the tobacco monopoly was abolished and the public finances were

reorganised on the basis of customs duties and new direct taxes on industry and

24 Owen, Prosperity without Progress

.25 Anderson, Cacique democracy.26 Wickberg, Chinese in Philippine Life

.27 Fenner, Cebu under the Spanish Flag

, studied the case of Cebu in depth. See also Cullinane, Changing nature.

28 Doeppers and Xenos, Population and History

; Owen, Paradox.29 Fradera, El estanco del tabaco.



314

Josep M. Fradera


commerce.

30

However, this change revealed the weaknesses and contradictions of

the Spanish presence in the remote Asian possession. The Spanish private sector

had only a weak basis in the colony and Spanish public finance was insufficient

to assist in making the Philippines more attractive for investment. This crisis inthe colonial model coincided with an end to almost a century of political stability

in Spain in 1868. The period 1868–1882 marked a time of fundamental change

in the relations between Philippine society and the Spanish colonial dominion.

The most notable aspect of the change was the increase of competition between

Spanish private enterprise in the colony and Filipino and Chinese mestizo busi-

ness interests, at a time when the colonial administration attempted to interest

Spanish industrialists, shipowners and traders in establishing business operations

in the archipelago. This tension between autochthonous entrepreneurship and

Spanish business cannot be simplified in any way, since the relationships betweenboth were close on occasion, as was the connivance of the colonial government

with one and the other.

During 1882–91, the metropolis made a substantial effort to more effectively

‘recolonise’ the archipelago. In this process, the state ceded an essential part of

its previous economic role, particularly those related to its fiscal role. The first and

most important change was the conversion of part of the state’s tobacco revenue

system into the assets of an important Spanish company, the Compañía General de

Tabacos de Filipinas

, also known as Tabacos de Filipinas

. The company was established

in Barcelona in 1881 with French and Spanish stockholders, and was directed bya wealthy shipowning and financial family, the Marquises of Comillas.

31

Tabacos de Filipinas

soon played a major role in the Philippines. It maintained

interests in tobacco production in the provinces of Cagayan and Isabela, and at

the request of the Spanish government, it became equally involved in sugar

production and in cabotage. The Comillas business group controlled long-

distance shipping between Spain and the Philippines after the opening of the Suez

Canal in 1869, and used this position to build a conglomerate of colonial business

interests during the last decades of Spanish rule in the Philippines.

32

It adapted

perfectly to the changeover to American colonial rule, to the extent that itachieved exceptionally good business results during the first decade of the twen-

tieth century.

33

During 1880–98 a good number of other companies also began activities in

the Philippines, in agricultural production for export in Visayas or as wholesale

traders in the main cities of the archipelago. It was a short but intense episode of

business development, which has yet to be fully assessed by economic historians.

Second, the state facilitated the proliferation of new Spanish economic interests

in the Philippines as much as possible. Business interests benefited not only from

30 This change in fiscal policy can be seen in its results in Roldán de Montaud, La hacienda públicafilipina.

31 Giralt Raventós, Compañía General de Tabacos

; Izard, Dependencia y colonialismo.32 Rodrigo Alharilla, Línea de vapores-correo.33 Delgado, Bajo dos banderas.




315


changes in the fiscal regime during 1882–1883, but also from other forms of

support. The main reason was that Spain perceived the Philippines as the basis

for the colonial future of the country, even though the unfolding crisis in Cuba

foretold a conflict with the US and end to Spain’s colonial ambitions. After the1885 Berlin Congress, the effective colonisation of the Philippines became a

fundamental element of Spanish foreign policy.

34

In that context, the Spanish

government organised a large Philippines exhibition in Madrid in 1887 and a

smaller one in Barcelona in 1888.35

The key figure driving this development in Spanish policy was Victor Balaguer,

a liberal Catalan politician, who propagated the retreat of the state as an eco-

nomic force in the Philippine archipelago.36 These initiatives were part of the

effort to entice Spanish investors. At the same time, they reinforced the state’s

authority in the colony. Young Filipino students attending the exhibitions inMadrid or Barcelona were incensed by ethnographic presentations of the different

ethnic groups in the archipelago. They emphasised the archipelago’s internal

differences and its cultural backwardness relative to the metropolis: a clear dem-

onstration of Spain’s intention to recolonise the Philippines.

Spain’s economic intentions toward the colony became increasingly clear. A

striking aspect was the tariff policy of the 1880s, which culminated in the 1891

Trade Relations Law, which was protectionist in favour of Spain and the Philip-

pines.37 Spain lowered duties on the importation of sugar, tobacco, coffee and

some other products, of obvious importance in the case of the Philippines. Thistariff revision had a considerable impact on Philippine foreign trade. In effect, it

was an important stimulus for Spanish companies and their subsidiaries in the

colony. Spain’s exports to the Philippines increased. In contrast, Philippine exports

to Spain remained at modest levels, with the exception of leaf tobacco traded by

Tabacos de Filipinas and other Spanish and foreign companies established in the

Philippines.38

Until the end of Spanish colonial rule in 1898 exports of textiles and foodstuffs

from Spain to the Philippines increased quickly, displacing Spanish exports to

other European countries.39

During the 1880s, the share of Spanish textiles inPhilippine imports reached levels between 26 and 42 per cent, In terms of

quantity, Spain’s exports of textiles increased from an annual average of 826 tons

during 1880–84, to 6891 tons during 1895–99.40 Despite protection of Spanish

trade interests, the trade policies of the Philippines were more liberal than they

had been before. Consequently, Philippines exports increased significantly, par-

34 On this change in the political situation and its impact on the Philippines and the small Spanishenclaves in the Pacific, see Elizalde Pérez-Grueso, España en el Pacífico.

35 Sánchez Gómez, Un Imperio en la Vitrina .36 Palomas Moncholí, Víctor Balaguer , pp. 561–84.37 Legarda, After the Gallions , pp. 202–4.38 An excellent example of this can be found in Salazar, Baer and Co.39 For the analysis of the evolution of Spanish textile exports, see Sudrià, Exportación en el

desarrollo.40 Sudrià, Exportación en el desarrollo, p. 156.



316 Josep M. Fradera


ticularly exports of Manila hemp and sugar. The aftermath of the 1895 Philippine

revolution abruptly ended the growth of Philippine exports in general and of

imports of manufactures from Spain.

THE END OF SPANISH COLONIAL RULE

The change in the composition of foreign trade is indicative of Spain’s desire to

update an obsolete but stable colonial model. Although this development has not

been fully studied, it is probable that it came at a cost of reduced imports from

the rest of the world and increasing rivalry in the local business world between

Spanish import firms and firms that imported from other parts of the world. At

the same time, the Philippine elites saw that Spain intended to continue a colonial

policy that allowed political reforms in Cuba and Puerto Rico, while it contem-

plated only minor administrative changes in the Philippines.41 This discontent

strengthened the nationalist-separatist cause that took shape after the 1872 exe-

cution of three Filipino priests that sparked the ‘Cavite crisis’.42 Proto-nationalist

consciousness grew among parts of the urban population, the groups known as

ilustrados or ‘enlightened ones’, composed of educated youths, admirers of Europe,

the US or Japan, the nationalist sectors of the Catholic church in the Philippines,

and the katipuneros (groups of workers who started the fight for independence in

1896).43 A complex set of problems related mainly to access to land and rural

poverty, catalysed grave tensions that supported the revolutionary mobilisation

against Spain during 1895–98 and against the US in the following years.44

Unfortunately, available research has not yet provided us with a good impres-

sion of the problems that existed in the rural areas of the Philippines during

the last few decades of the nineteenth century, nor of the tensions between the

different groups that vied for control over agrarian income. It is known that the

institutions that regulated access to land increased rural tensions. For example,

the system of kasama (sharecropping) was expensive for the small grower as it

allowed landlords to appropriate significant parts of the harvest.45 It is also clear

that strong population growth made access to land increasingly difficult in parts

of Luzon and the Visayas.46 Both factors affected the stability of the rural family

and obstructed the intergenerational transfer of accumulated social savings.

Aggravating the falling returns from agricultural production, the colonial govern-

ment continued to demand corvée labour, which was a significant burden on the

41 Fradera, Ciudadanía.42 I will just refer to the studies of Ileto, Pasyon and Revolutions and Filipinos and their Revolution.43 For some aspects of interest related to all of this, see the classic study Schumacher, Propaganda

Movement , and essays of the same author in Making of a Nation.44 For information on how the certain groups in the rural society used the mechanisms of power

institutionalized by the State in the colony, see Guerrero, Provincial and municipal elites.45 There are some indications in McLennan, Changing human ecology.46 There are some glimpses in Fegan, Social history.



The historical origins of the Philippine economy: a survey of recent research of the Spanish colonial era 317


Philippine population. The combination of both elements is likely to have

reinforced the potential for conflict in the rural areas and the phenomenon of

tulisanismo.

This rural instability not only affected the lower strata of the population. Theagrarian crisis sparked a battle between large Spanish landowners – among them

the Spanish religious orders – and the large and medium-sized Philippine tenant

farmers.47 When the Americans took control of the archipelago in 1901, the

religious orders controlled some 400,000 acres of land, of which some 250,000

were located around Manila.48 The socially and regionally uneven distribution of

land ownership was one of the biggest problems in the Philippines in the closing

years of Spanish rule.49 The conflict between the family of revolutionary hero José

Rizal and the Augustinians, who owned the Calamba hacienda, is an example of

this and reveals the factors that pushed nationalist radicalisation in the Philippines,even though agrarian social relations in the archipelago as a whole were varied

and complex.

CONCLUSION

At the start of the twentieth century, the Philippines had several important eco-

nomic assets: the formation of a native elite; an important process of economic

integration between the different provinces; links with international capital mar-

kets; a significant development of export-orientated agriculture consisting of both

plantations and smallholders; and, finally, a large degree of openness of its econ-

omy to international trade. On the other hand, the Philippine economy was

forced to endure economic distortions caused by a new system of colonial rule

until the establishment of Japanese rule in 1942.50 Still, there was continuity across

the Spanish and American years. Most relevant was the continued inequality in

access to land. The American administration promised agrarian reform in 1901.

However, the reforms in effect reinforced the position of a ruling class that was

friendly to the American colonial government and failed to resolve the endemic

problem of the concentration of land ownership.51

This brief survey elaborated some hypotheses about the first stage of Philippine

economic development on the basis of recent studies. What may appear to have

been an autonomous development of native Philippine rural capitalism and of a

stratum of medium-sized traders since the end of the eighteenth century, was

47 Delgado, Menos se perdió. On the origin of the privileged position of the Church in thePhilippines in relation to land ownership, see Cushner, Landed Estates and Roth, Friar Estates .

48 Taylor, Philippine Insurrection.49 For a comparison of agricultural development in the Philippines, Thailand and Indonesia, which

in large part overestimates the development of the plantation during the Spanish colonial and American periods, see Hayami, Ecology, history, and development.

50 McCoy, An Anarchy of Families ; Hutchcroft, Booty Capitalism.51 Some insights of this crucial problem in Riedinger, Agrarian Reform.





actually influenced by Spanish colonial policy. Two influences seem to be of prime

importance: the formation of a peculiar internal market as a consequence of the

state’s involvement in the economy; and the opening up of foreign trade and of

Manila as a capital market to foreign, but not necessarily Spanish, firms. At thesame time, the state guaranteed some mechanisms (very oppressive ones,

undoubtedly) that allowed the provincial elites to have access to peasant labour

in the form of forced corvée labour, at arbitrary, possibly below-market prices.

The change in Spanish colonial policy in the 1880s aimed to take advantage

of the development of an important agrarian economy. At the same time, it

favoured the position of Spanish traders in the archipelago. Although these

changes may have had some positive consequences for the development of the

Philippine economy, it is important to acknowledge that the changes were the

result of pressure exerted by the government in Spain through its demands forPhilippine tobacco at a low cost.

REFERENCES

Aguilar, F. (1994) Beyond inevitability: The opening of Philippine provincial ports in 1855. Journal of Southeast Asian Studies , 25, 70–90.

Anderson, B. (1995) Cacique democracy in the Philippines: Origins and dreams. In: Rafael, V., ed.

Discrepant Histories: Translocal Essays on Filipino Cultures (Philadelphia: Temple University Press).Bauzon, L. E. (1981) Deficit Government: Mexico and the Philippine Situado (1606–1804). (Tokyo: Centrefor East Asian Cultural Studies).

Cheong, W. E. (1970) Changing the rules of the game: the India-Manila trade, 1785–1809. Journal of Southeast Asian Studies , 1, 1–19.

Cheong, W. E. (1971) The decline of Manila as the Spanish entrepôt in the Far East, 1785–1826: Itsimpact on the pattern of Southeast Asian trade. Journal of Southeast Asian Studies , 2, 142–158.

Cortes, R. M. (1974) Pangasinan, 1572–1800. (Quezon City: New Day Publishers).Cullinane, M. (1982) The changing nature of the Cebu urban elite in the 19th century. In: McCoy,

A. W., and De Jesus, E., eds. (1982) Philippine Social History: Global Trade and Local Transformations (Quezon City: Ateneo de Manila University Press).

Cushner, N. P., ed. (1971) Documents Illustrating the British Conquest of Manila, 1762–1763. (London: Royal

Historical Society).Cushner, N. P. (1971) Spain in the Philippines. (Quezon City: Ateneo de Manila University Press).Cushner, N. P. (1976) Landed Estates in the Colonial Philippines. (New Haven: Yale University Press).De Jesús, E. C. (1980) The Tobacco Monopoly in the Philippines: Bureaucratic Enterprise Social Change, 1766–

1880. (Quezon City: Ateneo de Manila University Press).De Jesús, E. (1982) Control and compromise in the Cagayan Valley. In: McCoy, A. W., and De Jesus,

E., eds. (1982) Philippine Social History: Global Trade and Local Transformations (Quezon City: Ateneode Manila University Press).

Delgado, J. M. (1996) Bajo dos banderas (1881–1910): Sobre cómo sobrevivió la Compañía Generalde Filipinas al Desastre de, 1898. In: Orovio, C. N., Puig-Samper, M. A., and Mora, L. M. G.,eds. La Nación Soñada: Cuba, Puerto Rico Y Filipinas Ante el 98 . (Madrid: Ediciones Doce Calles).

Delgado, J. M. (1999) ‘Menos se perdió en Cuba’, la dimensión asiática del 98. Illes I Imperis , 2, 49–62.

Díaz-Trechuelo, M. L. (1965) La Real Compañía de Filipinas . (Seville: Escuela de Estudios Hispano- Americanos).

Doeppers, D. F., and Xenos, P., eds. (1998) Population and History: The Demographic Origins of the ModernPhilippines, (Quezon City: Ateneo de Manila University Press).

Elizalde Pérez-Grueso, M. D. (1992) España En El Pacífico: la Colonia de Las Islas Carolinas . (Madrid:Consejo Superior de Investigaciones Científicas).



The historical origins of the Philippine economy: a survey of recent research of the Spanish colonial era 319


Elizalde, M. D., Fradera, J. M., and Alonso, L., eds. (2001) Imperios y Naciones en el Pacífico (Madrid:Consejo Superior de Investigaciones Científicas).

Fegan, B. (1982) The social history of a Central Luzon barrio. In: McCoy, A. W., and De Jesus, E.,eds. (1982) Philippine Social History: Global Trade and Local Transformations (Quezon City: Ateneo de

Manila University Press).Fenner, B. L. (1985) Cebu Under the Spanish Flag (1521–1896): an Economic Social History. (Cebu: SanCarlos Publications).

Fradera, J. M. (1996) El estanco del tabaco y la reforma de la hacienda filipina, 1760–1860. In: Comín,F., and Vallejo, R., eds. La Reforma Fiscal de Mon-Santillán Ciento Cincuenta Años Después . (Madrid:Hacienda Publica Española).

Fradera, J. M. (1999) Filipinas, la Colonia més Peculiar: La Hacienda Pública en la Definición de la Política Colonial, 1762–1868. (Madrid: Consejo Superior de Investigaciones Científicas).

Fradera, J. M. (1999) Opio y negocio, o las desventuras de un español en China. In: Fradera, J. M.Gobernar Colonias. (Barcelona: Ediciones Península).

Fradera, J. M. (2004) Ciudadanía, ciudadanía congelada y súbditos residuales: tres situaciones bajoun mismo Estado. Illes I Imperis , 7, 113–134.

Gamella, J. F., and Martín, E. (1992) Las rentas del anfión: El monopolio del opio en las Filipinas(1844–1898). Revista de Indias , 53, 61–106.Giralt Raventós, E. (1981) La Compañía General de Tabacos de Filipinas , 1881–1981. (Barcelona: Com-

pañía General de Tabacos de Filipinas).Guerrero, M. C. (1982) The provincial and municipal elites of Luzon during the revolution, 1898–

1902. In: McCoy, A. W., and De Jesus, E., eds. (1982) Philippine Social History: Global Trade and Local Transformations (Quezon City: Ateneo de Manila University Press).

Hayami, Y. (2001) Ecology, history, and development: a perspective from rural Southeast Asia. World Bank Research Observer , 16, 169–198.

Hutchcroft, P. D. (1998) Booty Capitalism: the Politics of Banking in the Philippines . (Ithaca: CornellUniversity Press).

Ileto, R. C. (1979) Pasyon and Revolution Popular Movements in the Philippines, 1840–1910. (Quezon City:

Ateneo de Manila University Press).Ileto, R. C. (1998) Filipinos and Their Revolution: Event, Discourse and Historiography (Quezon City: Ateneode Manila University Press).

Izard, M. (1974) Dependencia y colonialismo: La Compañía General de Tabacos de Filipinas. Moneda Y Crédito, 130, 47–89.

Laarhoven, R. (1989) The Triumph of Moro Diplomacy: the Maguindanao Sultanate in the 17th Century (QuezonCity: New Day Publishers).

Larkin, J. A., ed. (1979) Perspectives on Philippine Historiography. A Symposium. (New Haven: Yale University Press).

Larkin, J. (1972) The Pampangans: Colonial Society in a Philippine Province . (Berkeley: University of Califor-nia Press).

Larkin, J. (1993) Sugar and the Origins of Modern Philippine Society. (Berkeley: University of California

Press).Legarda, B. L. (1999) After the Galleons: Foreign Trade, Economic Change and Entrepreneurship in the Nineteenth

Century Philippines. (Quezon City: Ateneo de Manila University Press).McCoy, A. W., ed. (1994) An Anarchy of Families: State and Family in the Philippines (Quezon City: Ateneo

de Manila University Press).McCoy, A. W. (1982) A queen dies slowly: The rise and decline of Iloilo City. In: McCoy, A. W., and

De Jesus, E., eds. (1982) Philippine Social History: Global Trade and Local Transformations (QuezonCity: Ateneo de Manila University Press).

McCoy, A. W., and De Jesus, E., eds. (1982) Philippine Social History: Global Trade and Local Transformations (Quezon City: Ateneo de Manila University Press).

McLennan, M. (1982) Changing human ecology on the Central Luzon Plain: Nueva Ecija, 1705– 1939. In: McCoy, A. W., and De Jesus, E., eds. (1982) Philippine Social History: Global Trade and

Local Transformations (Quezon City: Ateneo de Manila University Press).Owen, N. (1984) Prosperity Without Progress: Manila Hemp and Material Life in the Colonial Philippines .

(Berkeley: University of California Press).Owen, N. G. (1987) The paradox of 19th Century population growth in Southeast Asia: Evidence

from Java and the Philippines. Journal of Southeast Asian Studies , 18, 45–57.Palomas Moncholí, J. (2004) Víctor Balaguer: Renaixença, Revolució I Progrés (Vilanova i la Geltrú: Antina).





Phelan, J. L. (1967) The Hispanization of the Philippines, Spanish Aims and Filipino Responses, 1562–1700.(Madison: Wisconsin University Press).

Reed, R. R. (1978) Colonial Manila: the Context of Hispanic Urbanism and Process of Morphonogenesis .(Berkeley: University of California Press).

Resnick, S. A. (1970) The decline in rural industry under export expansion: a comparison among Burma, Philippines and Thailand, 1870–1938. Journal of Economic History, 30, 51–73.Riedinger, J. M. (1995) Agrarian Reform in the Philippines: Democratic Transitions and Redistributive Reform.

(Stanford: Stanford University Press).Rodrigo Alharilla, M. (1998) La línea de vapores-correo España-Filipinas (1879–1905). Cuadernos de

Historia (Instituto Cervantes, Manila), 2–3, 133–150.Roldán de Montaud, I. (2001) La hacienda pública filipina de 1800 a 1898. In: Elizalde, M. D.,

Fradera, J. M., and Alonso, L., eds. (2001) Imperios y Naciones en el Pacífico (Madrid: ConsejoSuperior de Investigaciones Científicas).

Roth, D. M. (1977) The Friar Estates of the Philippines (Albuquerque: University of New Mexico Press).Routledge, D. (1979) Diego Silang and the Origins of Philippine Nationalism. (Quezon City: Philippine Center

for Advanced Studies).

Salazar, W. (2001) Baer and the transformation of the Philippine tobacco industry. In: Elizalde, M.D., Fradera, J. M., and Alonso, L., eds. (2001) Imperios y Naciones en el Pacífico (Madrid: ConsejoSuperior de Investigaciones Científicas).

Sánchez Gómez, L. A. (2003) Un Imperio en la Vitrina: El Colonialismo Español en el Pacífico y la Exposiciónde Filipinas en 1887. (Madrid: Consejo Superior de Investigaciones Científicas).

Schumacher, J. (1973) The Propaganda Movement 1880–1895: the Creators of a Filipino Consciousness, the Makers of a Revolution. (Manila: Solidaridad Publishing House).

Schumacher, J. (1991) The Making of a Nation: Essays on Nineteenth-Century Filipino Nationalism. (QuezonCity: Ateneo de Manila University Press).

Schurz, W. L. (1939) The Manilla Galleon. (New York: E.P. Dutton & Co).Sturtevant, D. (1976) Popular Uprisings in the Philippines , 1840–1940. (Ithaca: Cornell University Press).Sudrià, C. (1983) La exportación en el desarrollo de la industria algodonera española, 1875–1920.

Revista de Historia Económica , 2, 369–386.Taylor, J. (1971) The Philippine Insurrection Against the United States (Pasay City: Eugenio Lopez Founda-tion) 3 volumes.

Tepaske, J. J. (1983) New world silver: Castile and the Philippines, 1590–1800. In: Richards, J. F., ed.Precious Metals in the Later Medieval and Early Modern Worlds. (Durham, NC: Duke University Press).

Warren, J. F. (1981) The Sulu Zone 1768–1898: Dynamics of External Trade . (Singapore: SingaporeUniversity Press).

Warren, J. F. (2003) Iranun and Balangigi: Globalization, Maritime Raiding and the Birth of Ethnicity. (Sin-gapore: Singapore University Press).

Wickberg, E. (1964) The Chinese mestizo in Philippine history. Journal of Southeast Asian History, 5, 62– 100.

Wickberg, E. (1965) The Chinese in Philippine Life (New Haven: Yale University Press).