74 



MANILA DAILY BULLETIN 



THE COMMERCE OF THE PHILIPPINE ISLANDS 

 A SURVEY OF NINETEEN YEARS OF PROGRESS 



By Hiram Merriman, Secretary, The Manila Merchants' Association 



The most prosperous period of the Philip- 

 pine Islands under the Spanish adminis- 

 tration was from 1888 to 1892. During 

 those years the foreign trade of the Islands 

 averaged slightly less than 1*80,000,000 a 

 year. In 1918 the trade amounted to 1*467- 

 000,000, or a six-fold increase. During nine- 

 teen years of American leadership trade has 

 certainly "followed the flag". The United 

 States has naturally profited the most as a 

 result of the increased trade. During the 

 last years of Spanish rule the United States 

 supplied but 3% of the imports of the Islands, 

 slightly over 1*1,000,000. During 1918 im- 

 ports from the United States amounted to 

 PI 17,000,000, or 60% of the total importa- 

 tion into the Islands. 



As soon as order had been obtained in the 

 principal ports after American occupation 

 they were open to commerce, and in 1901 

 the first Philippine tariff was put into effect, 

 it being the same as the Spanish tariff with 

 a few modifications. Both imports and ex- 

 ports jumped immediately. In 1901 ex- 

 ternal trade amounted to P20,000,000 more 

 than the best period of Spanish times. In 

 1902 the trade was ^107,000,000 and in 1903 

 1*124,000,000. 



From 1900 to 1909, trade increased steadily, 

 doubling in the ten-year period. The move- 

 ment of trade was quickened from 1909 to 

 1913, due in large measure to the tariff law 

 of 1909, which called for free admission of 

 Philippine products with certain limitations; 

 most of these limitations were removed in 

 1913. The two years, immediately preced- 

 ing the war, 1913 and 1914, covered a period 

 of depression to some extent in the United 

 States, and in a larger measure in the Islands, 

 due to poor crops and apprehensions on the 

 part of business men as to the future status 

 of the Islands. This condition in the summer 

 of 1914 was approaching a critical stage, 

 when the European War broke out, and for 

 a time appeals were even made to have Con- 

 gress provide a subsidy of 5P10,000,000 to 

 tide the Islands over the war time depression. 



It was not until April 1915 that a change 

 was noticed. At that time the increased 

 demand for Philippine products was begin- 

 ning to be felt, and a limited amount of 

 shipping space could be secured. 



The sensational advance in the export 

 trade of the Islands beginning in the summer 

 of 1915 was anticipated by very few, and 

 thus, the Islands have not bean able to reap 

 the full benefit of the results which might 

 have been obtained by foresight and increased 

 production. 1917 and 1918 may be summed 

 up in one word prosperity. In some cases 

 large profits have been taken advantage of 

 and foundations have been laid for future 

 development. In some lines the expansion 

 has been too great and a period of reaction 

 may be looked forward to. 



GROWTH OF IMPORT TRADE WITH 

 THE UNITED STATES 



The percentage of United States in Phil- 

 ippine imports increased four-fold from 

 1897 to 1901, amounting to over 1*7,000,000. 

 This, however, was negligible compared with 

 the enormous total of the last few years. 

 The largest proportion of this early com- 

 merce was for the needs of American civil 

 population, in fact the most important item 

 was that of malted liquors. In the years 

 immediately _ following, imports increased 

 slowly, coincident with the growing Amer- 



ican population. All the imported staples 

 used by the natives, canned goods, cotton 

 goods, etc., were still in the hands of British 

 and other foreign houses, which maintained 

 branches throughout the Islands and with 

 whom the American firms with limited capi- 

 tal and little knowledge of local conditions 

 could not compete. By 1906 only 16% of 

 the imports were in American hands. 



During this year, however, the United 

 States Congress passed a tariff law which 

 provided for reciprocal free trade between 

 the United States and the Philippine Islands. 

 This was the signal for a revival in Phil- 

 ippine trade on the part of the United States 

 exporters and in 1910 30%, and in 1911 40% 

 of the imports came from the United States. 

 In 1909 imports from the United States were 

 1*12,000,000; in 1912, three years later, they 

 were 1*48,000,000. 1913 was a period of 

 depression in the Islands and imports from 

 the United States dropped slightly (11%). 

 In 1914 came the open of the world war, a 

 consequent scarcity of ships and a falling 

 off in both imports and exports was notice- 

 able. Imports from the United States, 

 however, increased and have continued to 

 do so with heightened momentum. In 1918 

 importation from the United States was 

 P117.649.222. 



FUTURE TRADE WITH THE U. S. 



The Mother Country now has a monopoly 

 in both the export and import trade of the 

 Islands and foreign competition is steadily 

 getting smaller. 



The population of the Islands is now over 

 10,000,000. There are few local manufac- 

 tures; many of the necessities and most of 

 the luxuries must be obtained from abroad. 

 Thus a large potential market is lying ready 

 for tapping by the American manufacturer. 

 This market can of course be developed only 

 by increasing the foreign purchasing power 

 of the people, which is measured in terms of 

 exports. The problem of Philippine trade, 

 then, is not merely of sending agents to sell 

 American articles, but consists as well of 

 encouraging Philippine production by tariff 

 inducements favorable to Philippine articles 

 of commerce; by encouraging capital to be 

 invested in the Islands; and in the establish- 

 ing of cheap and reliable freight service for 

 transportation of these articles to the United. 

 States. 



HEMP 



Hemp is the main stay of Philippine trade. 



Abaca (Manila hemp) comprises one- 

 half of the exports of the Philippine Islands. 

 The prosperity of the country largely depends 

 on it. Hence it is gratifying to note that 

 since American occupation the exports have 

 increased from 70,000 tons to 170,000 tons, 

 the export value a little more than doubling 

 during that time. The United States, 

 even before 1899, was the largest purchaser 

 of the higher grades, but a large part went 

 thru English hands. By 1918, however, 

 most of American supply was shipped direct, 

 the United States taking 1*75,000,000 out 

 of a total value of P115,000,000. In spite 

 of temporary changes in the market, abaca, 

 being a Philippine monopoly, will always 

 remain a staple article and in constant 

 demand, which will increase as the world's 

 need for rope products increases. Sisal 

 fiber, coming mostly from Yucatan, can be 

 termed a competitor of abaca only in the 

 lower grades, and then only in the factor 

 of price, and when not enough abaca fiber 

 can be procured. 



COPRA AND COCONUT OIL 



During Spanish times copra, the dried 

 meat of the coconut, was exported in fair 

 quantities to France and used in soap making. 

 The annual export was from 20,000 to 30,- 

 000 tons yearly. During the latter years of 

 Spanish occupation renewed interest was 

 taken in coconut cultivation, and numerous 

 large plantations were started. Since 1900 

 the annual production in the Islands has in- 

 creased four-fold, but only within the last 

 few years has any appreciable portion been 

 shipped to the United States. Just before 

 the war the United States purchased about 

 15% of the annual export, but during 1917 

 two-thirds of the total, and in 1918 practical- 

 ly all, went to the United States. 



During the last four years, however, copra 

 exports have decreased, due to establishing 

 mills in the Islands for extracting the oil. 

 As far back as 1885 primitive mills were in 

 operation but they could do little in competi- 

 tion with factories of France and Germany, 

 which controlled the soap trade of the world. 

 Early trade reports of the United States 

 Bureau of Commerce speak of possibilities 

 of local extraction, but coconut oil manufac- 

 ture in the Islands did not assume large 

 proportions until 1916, when 15,000 tons 

 were exported, valued at 1*7,000,000. In 

 1917 45,000 tons were exported, valued at 

 1*23,000, 000 and in 1918, 1 15,000 ts. valued at 

 1*63,000,000. All of these went to the U.S.A. 



There are now over forty companies in 

 the Islands organized for the manufacture 

 of coconut oil, with around 200 expellers for 

 expressing the oil. The increased plantings 

 of trees in the last few years give rise to an 

 estimate of 200,000 to 250,000 tons a year as 

 the export in the very near future. During 

 the war, in addition to its uses as soap, etc., 

 coconut oil has been used to make glycerine, 

 a constituent of high explosives. 



There are those who think that now the 

 war is ended th^ demand for coconut oil will 

 slacken, but its increased use for edible 

 purposes as vegetable butter for cooking and 

 eating open up a market for it which is capa- 

 ble of indefinite expansion. 

 SUGAR 



The sugar industry in the Islands is of long 

 standing and during the latter years of 

 Spanish administration exports reached 280,- 

 000 tons per annum, which amount had 

 only been exceeded once since that time. 



Most of this sugar comes from the Islands 

 of Negros and until very recently was of low 

 grade, being exported to China and Japan 

 ports. Beginning with 1914, however, most 

 of the sugar has gone to the United States. 

 The establishment of sugar centrals for the 

 production of sugar suitable for the Amer- 

 ican market has paved a way for the revival 

 of the sugar industry and large amounts 

 of capital are coming in from Hawaii and the 

 United States for building new centrals. 

 CIGARS AND TOBACCO 



The Cagayan valley has long been the 

 center of the Philippine tobacco industry, 

 and in Spanish times the tobacco trade was 

 in the hands of the Government monopoly. 

 European countries, principally Spain and 

 Germany purchased the tobacco leaf, few 

 cigars being exported. During the last 20 

 years several campaigns have been conducted 

 for the purpose of introducing Philippine 

 cigars in the American market, but until 

 1917 very little progress was made. In 

 1917 284,000,000 were exported and in 1918 

 359,000,000 of which 80% went to the U. S.A. 



The growth has, of course, been a result 

 of the war and if Philippine cigars are to re- 

 tain their hold in the American market an 

 extensive and persevering campaign must 

 be carried out both in regard to introducing 

 the cigars to consumers and in the improve- 

 ment of quality. The Bureau of Internal 

 Revenue is doing good work in both of these 

 lines and a rigid inspection is made of all 

 cigars exported from the Philippines. 



