After the Galleons: Foreign Trade, Economic Change, and Entrepreneurship in the Nineteenth-Century Philippines (2023)

Author(s):Legarda, Benito J.
Reviewer(s):Giraldez, Arturo

Posted by EH.NET (Nov 2001)


Benito J. Legarda,After the Galleons: Foreign Trade, Economic Change, and Entrepreneurship in the Nineteenth-Century Philippines🇧🇷 Madison WI: University of Wisconsin Center for Southeast Asian Studies, 1999. x + 401 S. 22,95 $ (Taschenbuch), ISBN: 1-881261-28-x.

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Revised for EH.NET by Arturo Giraldez, Department of Modern Languages ​​and Literatures, Universidad del Pacífico.

The title of Benito Legarda's book is somewhat misleading as the period covered by the work begins well before the 19th century. For real,after the galleonsis an economic history of the Philippines from the arrival of the expedition of Miguel Gómez de Legazpi in 1565 to metropolitan independence in 1898. Legarda examines the development of the Philippines from an archipelago inhabited by almost self-sufficient communities up to that time as it became an agricultural export economy dependent on foreign trade to meet domestic needs. But, as the author notes, “The 19th-century Philippine economy did not start from scratch. The earlier transshipment era dates back to pre-Hispanic times, and during the centuries that it was in force there was a process of administrative unification and geographic consolidation that laid the foundations for the emergence of national consciousness” (p. 5).

These sentences describe the plan of the book. Part 1 examines Philippine trade from before the arrival of the Spanish to 1815. Part 2 focuses on national exports and economic changes in the islands. Part 3 "Operational Aspects" deals with the founding of trading houses, their activities and innovations. Legarda follows Joseph A. Schumpeter's ideas on doing business and delves into the actors responsible for "creative answers" in business. Entrepreneurs and companies are presented in relation to new technologies, activities and financial institutions.

Chinesische und muslimische (persische und arabische) Händler besuchten seit dem 15. Jahrhundert die Küstengebiete des Archipels und zogen eine Bevölkerung an, die Siedlungen gründete, die von sesshafter Landwirtschaft und handwerklicher Produktion abhängig waren. Diese Gemeinschaften, „Barangays“ genannt, handelten untereinander und mit dem Rest Südostasiens und China. Sklaven, Bienenwachs und Gold wurden gegen Porzellan, Eisen, Blei, Zinn, Seide usw. eingetauscht. Die frühe Verbindung mit China würde eine entscheidende Rolle in der philippinischen Geschichte spielen. Die Präsenz der Spanier veränderte die Position der Philippinen in Bezug auf das asiatische Festland drastisch und machte die Inseln zu einem der entscheidenden Punkte der durch den Galeonenhandel geschaffenen Weltwirtschaft. Von 1565 bis 1815 kamen und gingen Schiffe von Manila nach Acapulco: „Es war die längste Schifffahrtslinie der Geschichte“ (S. 32). Amerikanisches Silber und überwiegend chinesische Seide waren die Waren, die zwischen Mexiko und den Philippinen ausgetauscht wurden. Ein Ricardian-Modell erklärt den Handel. Das Bimetallverhältnis von Silber zu Gold betrug 1560 in Mexiko 13 zu 1, in Europa 11 zu 1 und in China 4 zu 1. „China war lange Zeit die Saugpumpe, die das Silber aus der ganzen Welt aufsaugte“ (S. 31). Offensichtlich gab es Perioden der Konvergenz der Bimetallverhältnisse, aber bis zum Ende des 19. Jahrhunderts blieb China der weltweit führende Empfänger von Silber. In Anbetracht des Preisunterschieds bei den Silberpreisen: „Die Arbitrage-Gewinnchancen waren überwältigend“ (S. 31). Und das waren sie tatsächlich. Der Nettogewinn schwankte zwischen 100 und 300 Prozent. Die Chinesen brachten Waren für die Galeonen, stellten aber auch Schiffsbaumaterial, Materialien für die Militärgarnisonen und Lebensmittel für die Bürger von Manila zur Verfügung. Schilf brachte auch Handwerker und Kaufleute auf die Inseln. Die Chinesen haben vom 16. Jahrhundert bis heute eine entscheidende Rolle in der philippinischen Wirtschaft gespielt.

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The 18th century witnessed plans and proposals to change the monopoly framework of the galleon trade. After the British occupation of 1762-64, war frigates carrying European goods sailed between Cadiz in Spain and Manila. The Royal Philippine Company, founded in Madrid (1785), was "encouraged to attempt Asian enterprises" (p. 58) and the port of San Blas on the Pacific coast was established in 1766 to trade with the Philippines, giving Acapulco's position as the only Mexican port challenged the route of the galleons. The regulation of free trade in 1778 allowed several Spanish ports to trade with the colonies in addition to Seville and Cádiz, providing Mexico with new sources of trade.

The revolutionary changes did not happen in the 18th century—Filipino trade was still transshipment—but they did plant the seeds of future developments: foreign merchants arrived in Manila; local merchants could travel to other Asian ports; The export trade of local products was stimulated and local textile production promoted. "And the combined effect of the tobacco monopoly and the domestic operations of the export producers, including the company, was the beginning of agricultural specialization in the Philippines" (p. 90). Established by decree in 1781 by Governor José Basco y Vargas, the tobacco monopoly was implemented in 1783 and was Spain's most important source of tax revenue in the Philippines. There was also a "temporary use of bills of exchange in transferring funds through Guangzhou" (p. 89).

The decades from 1820 to 1870 were pivotal in world economic history and brought significant changes to the country's economy. An increase in trade and shipping in Asia coincided with the opening of the Suez Canal. Commodities like sugar, fiber, coffee, etc. became the main export products. The Spanish government gave subsidies to shipping. As a result of all this, there has been “a staggering increase in foreign trade levels” in the Philippines (p. 179). These events and trends were common to Southeast Asia's transformations from subsistence to export economies. However, the trajectory of the islands was different than in Southeast Asia. The economies of the region's colonial powers attempted to increase agricultural production by pressuring farmers to produce more export goods and to develop plantation economies. According to Legarda, in the period between 1820 and 1870: "Neither the pressure on the peasantry nor the development of large-scale plantation agriculture were primarily responsible for transforming the Philippines from a subsistence economy into an export economy" (p. 186). This role was played by foreign companies: "They formed the main link between the Philippine economy and the flows of world trade" (p. 211). Foreign traders introduced agricultural machinery and raised money for crops, which stimulated the development of new agricultural land and consequently exports. There has been an increasing concentration of commodity exports (sugar, abaca, tobacco and coffee) to Britain, China, the British East Indies, the United States and Spain [Tables 1 to 5]. Textiles dominated imports, accompanied by a decline in local manufacturing, and by 1870 rice had become an imported product. "Both trends had important social and demographic implications" (p. 178) [Tables 6 to 13].

British and Americans dominated foreign trade. The Chinese occupied the position of intermediaries between western foreign traders and the domestic market. Despite the dominant presence of foreigners in the Philippine economy, "an indigenous middle class emerged" (p. 213).

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To raise money, trading houses issued banknotes deposited in local currency by people of different economic levels. This capital was provided as an advance to finance farms. "Liquid wealth" came to rural Filipinos as merchants exercised control over the supply of export products (p. 256).

The economic landscape of the Philippines differed from that of Southeast Asia, namely Malaysia and Indonesia. Western foreigners, public institutions and Chinese have joined the burgeoning local entrepreneurs. The Spanish government contributed financially to the creation of public service companies (steam navigation, telegraphy); Western investors entered into some joint ventures with local capital (rice, sugar mills, textiles, railroads, and electricity), and national entrepreneurs invested in railroads and established the brewing industry. "But the crucial dichotomy between economic initiative and political authority marked the Philippine case as more in the East Asian tradition than in the Southeast Asian mold" (p. 289).

These processes of economic integration into the world market had their downsides. Income differences between regions and occupations have increased. The national textile industry could not compete with foreign imports. In the 1880s, the “decade of death,” the imbalance between commercial and subsistence agriculture and the rise of epidemics made low-income groups more vulnerable to disease (p. 335). The positive side of these transformations was the improvement in communications (telegraphy, mail, cables, steam lines, electricity, railroads), finance (foreign banks came to Manila), and infrastructure. Funds from the Frommen Werke, an ecclesiastical institution historically used to finance the galleon trade, were used to found the Banco Español-Filipino in 1851 and the Monte de Piedad (Savings and Pawn Shop) in 1882. a municipal water system was built in Manila with money from Obras Pias from the Philippine galleon's cargo (pp. 337-38).

Benito Legarda quotes Victor Clark who wrote: "A period of industrial development and expansion immediately preceded the rebellion which marked the beginning of the end of Spanish rule in the Philippines" (p. 339). Post-war US occupation of the country led to increased exports, technological innovation, and much higher standards of living. The Philippine economy would now look more like a Southeast Asian model. "The price of progress in the 20th century would be economic dependence" (p. 340).

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Filipino historians have done an excellent job. Benito Legarda's Economic History of the Archipelago is an important addition to this literature. For historians of Asia and the Spanish Empireafter the galleonsis important, but Legarda's concern for placing the Philippines in the context of global economic trends makes the book an excellent addition to the World History section. Legarda has written an important book for economic historians and development specialists. With clarity, rigor and avoidance of unnecessary jargon,after the galleonsdeals with topics and processes that still influence our time today. Academics, graduate students, and advanced students in economics, history, and other social sciences should read Legarda's work. It is an essential book.

Arturo Giraldez is co-editor of with colleague Dennis O. FlynnThe World of the Pacific: Countries, Peoples, and History of the Pacific, 1500-1900an 18 volume series published by Ashgate/Variorum. With Dennis O. Flynn and James OverEuropean entry into the Pacific, the fourth volume in the series.


Subjects):Trade and International and National Relations
Geographical area(s):Asia
periods):19th century


What happened to the Philippines after the galleon trade ended? ›

The Manila-Acapulco galleon trade ended in 1815, a few years before Mexico gained independence from Spain in 1821. After this, the Spanish Crown took direct control of the Philippines, and governed directly from Madrid.

What were the most important economic changes in the Philippines during the 19th century answer? ›

The demand for Philippine sugar and abaca (hemp) grew apace, and the volume of exports to Europe expanded even further after the completion of the Suez Canal in 1869. The growth of commercial agriculture resulted in the appearance of a new class.

How did the galleon trade affect the global economy during the 19th century? ›

The galleon trade had a negative effect on economic development in the Philippines, since virtually all Spanish capital was devoted to speculation in Chinese goods. The importance of the trade declined in the late 18th century as other powers began to trade directly with China.

What are the major contributions of galleon trade in the economy of the Philippines? ›

The Manila galleon trade made significant contributions to colonial Spanish culture. It helped to fashion the very society of the Philippines, which relied upon its income, its merchandise, and the services of Chinese, Malay, and other participants.

What is the importance of galleon trade in the Philippines? ›

The Acapulco-Manila Galleon Trade in 1565 is the beginning of commercial ties between Mexico and the Philippines, which represents an important contribution in the economy of the world by uniting three continents – Americas, Europe, and Asia.

What were the most important economic changes in the 19th century? ›

The Second Industrial Revolution caused growth in industry and transportation, which allowed increased trade between nations. Combined with a merchant marine capable of transporting goods by sea, a world economy began to form.


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