Philippine business history

It seems inexplicable that, while we live in a free-enterprise society, there has been very little written about the history of business in the Philippines. But the world we live in today is in large part, for better or for worse, the result of the actions of men and women in the world of business.

Business, or sometimes referred to as commerce, trade, industry, has played an equally vital role in our history as have government, politics, warfare, diplomacy, religion, arts and the sciences. In fact, business interests have most often dictated the developments in these other fields.

In the Middle Ages, it was businessmen who opened up the age of discovery; in the 18th century it was businessmen who were responsible for the great technological advances of the Industrial Revolution; and it was businessmen who provided the impetus and the financial resources for the Renaissance.

In the Philippines, businessmen opened the nation to world trade, developed the financial services sector, and are transforming the economy from agriculture-based to a service-based economy utilizing advanced technologies.

Business leaders like Ramon del Rosario, Jr., Jose Cuisia, Cesar Purisima, and Gabby Lopez are major voices in the national political scene. The most vigilant and effective spokesmen for different sectors in the economy are businessmen and businesswomen like JA Zobel, Manny Pangilinan, Doris Magsaysay Ho, Vic Valledor, Monchu Aboitiz, and Ronnie Concepcion.

Philippine historians have tended to overemphasize the political history of the country perhaps due to their own educational bias and interests. But I believe that business and economic forces have played an equally important role in the development (or lack) of our people.

For example at the beginning of our Spanish colonial era, shipbuilding was already a major industry in the Philippines. Spaniards took advantage of the abundance of raw materials here and established shipyards in various places like Cavite, Albay, Marinduque, Mindoro, and Masbate. Some of the largest ships in the world, at that time, were built in these Filipino facilities.

But Filipino workers were compelled to go and work in these places and were frequently not paid. These shipyards became the source of many revolts.

Major events in Philippine business history can be gleaned from several Philippine historical publications like 100 Events That Shaped the Philippines (1999) published by the National Centennial Commission and the 1950 Encyclopedia of the Philippines Vol.V and Vol. VI "Commerce and Industry" edited by Zoilo M. Galang and Negros Occidental History (1999) by Modesto P. Sa-Onoy.

Here, for example are just three major developments in Philippine business history:

Development of External or Foreign Trade. By the third-century AD, or maybe even earlier, there was already active trading between the Philippines and China. At the same time Arab traders were active in the country. Among the Philippine exports were raw cotton, abaca, cloth, rattan, pearls, gold, leather, mats, and hardwoods. Among the imports were porcelain, pottery, silk bronze gongs, mirrors, jade, coins , iron needles, tin, and wine.

The Spaniards introduced the galleon trade which, in the long term, was not good for the Philippine economy but made the Spaniards rich. The Manila-Acapulco galleon trade focused on making Manila a trading center where goods from China and other Asian countries were loaded into galleons and Asian traders collected payment in silver from Mexico. The result was that Spanish colonizers took no interest in developing agriculture and industry in the colony but instead focused on the galleon trade. Filipinos were not allowed to participate in the trade which lasted for 250 years.

Development of Banking and Finance. The first financial institution in the country was the Santa Hermandad y Cofradia de la Misericordia (Brotherhood of Mercy) founded on April 16, 1594. It was granted space in the galleon which enabled it to raise funds. It offered loans and marine insurance to merchants in Manila with interest rates or premium rates reaching 50%.

In 1851, four institutions including the Misericordia were combined to form the Obra Pias which raised capital for the establishment of the Banco Espanol-Filipino de Isabel II, which became the official bank of the Philippines with exclusive right to issue bank notes. The first note was issued on May 1, 1852. During the American period the name was changed to Bank of the Philippine Islands and continued to issue notes until the establishment of the Philippine Commonwealth on 1933. Today it is still one of the largest private banks in the country.

The first foreign banks were Chartered Bank of India, Australia and China (now Standard Chartered) in 1873 and Hongkong Shanghai Bank in 1875.

Founding of Meralco and PLDT. The Manila Electric Railway and Light Company (Meralco) was founded with an investment of US$2.5 million by Charles Swift of the Detroit Public Utilities. On March 24, 1903, the Philippine Commission granted Meralco a 50-year franchise to operate an electric railway system and supply electricity for Manila and its suburbs. In 1919 the company was reorganized into a new company, the Manila Electric Company to emphasize its electric service operations. From 1930 to 1935 the company sold electric appliances and motors. By 1950, the company had a new generating station called the Rockwell in Makati. On Jan. 8, 1962, the company’s first all-Filipino board of directors, led by Eugenio Lopez, Sr., was elected, and seven years later Meralco became the first billion-peso non-financial corporation in the Philippines.

In 1905, businessmen from San Francisco formed the Philippine Telephone and Telegraph Company and started constructing a modern telephone system in Manila.

On Nov. 28, 1928, Governor-General Stimson signed a bill granting a 50-year telephone franchise for the entire Philippines to the Philippine Long Distance Company (PLDT). The original incorporators were Alberto Barretto, George Dankworth, Ramon J. Fernandez, Gabriel La’O, Montague Lord, Celestino Rodriguez, W.Z. Smith, and J.E. Hamilton Stenot. In 1930, PLDT acquired all the assets of PT&T. In 1949, there were 12,000 installed telephones; in 1953 it had 33, 712 telephones, and in 1996 the company had 1, 518, 739. Today SMART, a PLDT subsidiary, claims 40 million cell phone subscribers.

There are still many more stories of Philippine business history waiting to be told, like the development of the retail trade from sari-sari stores to the giant malls, Filipino entrepreneurs like Ramon del Rosario, Sr and Salvador Araneta; taipans from Antonio Roxas Chua to Henry Sy to Tony Tan Caktiong and Filipino institutions like San Miguel Corporations and Philippine Air Lines.

Perhaps someday, the Philippine business world will have its own Teodoro Agoncillo or Ambeth Ocampo.