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Frontiers, 1836-1920

I. The years from 1839 to 1920 constitute a distinct era in the history of Philippinesugar industry.

Why distinct?

y There was enormous expansion in the export and cultivation of sugar.y Sugar society became firmly linked to the world market economy and responsive to

its fluctuations.

y As never before, sugar developed into a separate, wealthy sector of the nativeeconomy, unique in the high degree of foreign participation.

y Sugar regions served as models of a cash-crop society (a cash crop is a crop whichis grown for money. The term "cash crop" is used to differentiate from subsistencecrops, which are those fed to the producer's own livestock or grown as food for theproducer's family.)

o The leaders of sugar regions became influential persons in the colonial orderofSpanish and American regimes

y Sugar growers transformed the Philippine countryside from deep jungle intoextensive sugar haciendas, specifically major portions of western Negros andnorthern Pampanga.

o However, Negros and Pampanga developed along dissimilar lines in terms ofsocioeconomic structures.

Expansion of Sugar Trade

II. The expansion of sugar trade in the Philippines during 1836-1940 was entwinedwith foreign markets and foreigners.

y The world economy supplied an ever-increasing demand for sugar.y Outsiders supplied the sugar industry with credit and technology.

o In the earlier era, Filipino made their contribution to the sugar business in thecultivation sector, although Negros became responsible for the processing aswell.

o Until near the end of the period, Kapampangan continued to depend onforeigners for the last step of their manufacturing, and the division of labourthroughout the industry between those who did the overseas marketing andthose who produced sugar persisted during the time of expanding frontiers.

Some facts

y Between 1836 and 1916, sugar exports rose some 2.135 percent, from 15,097metric tons in the former year to 337,490 in the latter.

y By 1836, sugar had achieved first place on the list of exports; it continued to viewith abaca for that position throughout the rest of the nineteenth century.

What was the impetus to this dramatic transformation?

III. There was an enormous heightening in the demand for sugar that started evenbefore the mid-nineteenth century, especially among industrial nations.

y Sugar consumption in Great Britain rose from an annual average of 16.4 poundsper capita in the years 1840 to 1844 to 90.8 in the five years from 1910 to 1914.

y There was an annual rise per capita in the United States that went from 14.1pounds in 1835 to 86 in 1920.


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o Only during periods of major war did the rates dip in either country.y Aside from increase in demand, there was also population growth.

o US, population multiplied from 17 million in 1840 to 125 million in 1920o Great Britain, population multiplied from 19 million in 1841 to 42

million in 1921.

y Although Philippines remained only one of many suppliers, exploding worlddemand guaranteed the islands a bigger export market each year.

IV. The destination of Philippine sugar exports varied considerable over the period,reflecting changing realities in world market conditions.

y The US purchased consistently.y Great Britain bought more in the nineteenth century

oThis is contentious because the sugar originally consigned to GreatBritain ended up in American East Coast refineries.

y Australia, which was a significant outlet at the advent of era, faded after 1870sas it began to acquire more sugar from other sources and to develop its owncane industry.

y In the 1880s and continuing through the rest of the period, China and Japanbecame big buyers, taking up the slack as European purchases waned.

y Spain remained a limited consumer for its most far-flung colony, buyingrelatively small amounts of the very best grades of sugar available .

o More aggressive buying practices byBritish and American merchants inthe Philippines partially account for this Spanish weakness.

o More importantly, Spain had other suppliers closer to home, in theCaribbean and Europe.

y California, which early promised to be a large market, eventually came todepend on Hawaiis rising export as its chief source.

Foreign trading firms possessed withcommercial intelligence

V. The complexity of shifting world markets created a need for good, currentcommercial intelligence which foreign trading firms provided.

y British and American trading firms dominated and possessed expertise,contacts, finances, and facilities.

oKer and CompanyoSmith, Bell and CompanyoWarner, Barnes and CompanyoRussell, Sturgis and CompanyoPeele, Hubbell and Company

y Throughout the nineteenth century, they controlled the export trade althoughthe Spaniards tried through tariff legislation to end that stranglehold in the1880s and 1890s.

oSpains effort came too late and the only change in leadership in thetrade arose from the role of Philippine Chinese exporters during the lastdecade of the nineteenth century.

oBritish, American and Chinese firms maintained their dominance of thattrade into the twentieth century as well.

Events that led to the short-term fluctuations in the sugar export industry

y In the 1840s the decline of West Indian production resulting from prohibition ofslavery stimulated British demand for Philippine sugar.


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o Sharp rises in the 1850s and the early 1860s followed upon temporarycurtailment of alternate sources of greater military need associated withthe Crimean war (The war arose from the conflict of great powers intheMiddle East and was more directly caused byRussian demands toexercise protection over the Orthodox subjects of the Ottomansultan.)and then with the American civil war.

o Limitations of

American cane production, especially in

Louisiana,favoured increased use if Philippine sugar by the East Coast refiners .

y Beet sugar industry, which expanded in Europe and US, offered a newcompetition for cane.

o Germany, Russia, Austria-Hungary and France planted beets between1850 and 1900.

o California, Michigan and Ohio did the same thing.o To stimulate these industries, countries on the Continent legislated

bounty systems rewarding local production of export sugar. Theseflooded the English and American markets with cheap, high-grade sugar.

o The McKinley TariffBill included two cents per pound rebate on home-grown US sugar.

o The Dingley Tariff raised duties on imported sugar at a time when worldprices were low.

y In the 1840s world sugar prices dropped because of diminished processingcosts.

o In the 1880s, prices fell by almost half.o The bounty system represented one early factor accounting for low rates,

but oversupply affected it too: too much cane and beet sugar combined.o Manila prices did not fluctuate, but the amount of sugar exported leveled

off as the English trade permanently declined. Only the active role of Chinese traders and the China and Japan

markets for muscovado (unrefined brows sugar with strongmolasses flavour) maintained Philippine exports at their previouslevels.

The Asian trade, especially that of China, demanded mostly thelower grades of muscovado at cheaper prices and did notcompensate for the lost Western markets.

y The Philippine revolution further caused diminution of suagr exports, asdisruptions at the port ofManila and combat in central Luzon curtaileddeliveries from that northern island.

o Port facilities in Manila closed.o Philippiness only refinery at Malabon shut down.o In the south, hostilities proved far less costly, especially in Negros.o Shipments through Iloilo and Cebu dropped only modestly through the

period.

y Declining exports in the early years ofAmerican occupation had several causes.o Disastrous outbreak of the cattle disease rinderpest that killed 80% of

the carabao. Nearly one third of the carabao in Pampanga and one

quarter of those in Tarlac died.o The disease arrived came from French Indo-China.o There was an outbreak of human cholera.o Severe droughts and locust infestations added to the miseries of

industry.

y There was a shortage of good outlets as well.o Competition against Java for the China market.o Japan obtained its sugar from Formosa.o Englsih market never returned.


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o The Dingley Tariff inhibitedUS sales in spite of the fact that thePhilippines received a 25 percent reduction in duty after 1903.

o Lessening of the Cuban duty by 20% coupled with cheaper cost oftransportation from Cuba plus free entry ofHawaiian and Puerto Ricansugar kept the Philippines at a competitive disadvantage on theAmerican market.

oWeak markets prevented recovery in central

Luzon.

o Several old sources of credit had dried up.o The two American firms that supplied cash and machinery had gone

bankrupt. The large British lender faced deep financial trouble because ifits inability to sell its overstock of sugar in New York.

o Lack of these led to the creation of the Agricultural Bank.However, thebank made few loans to farmers, because they lacked the good, clearland titles acceptable as collateral.

VI. Philippine sugar producers focused on the need to garner tariff concessions on theAmerican market.y WilliamH. Taft, the first head of the Philippine Commission and later president

of the US, plus the efforts of other lobbyists for the Philippines pushed for

import privileges which proved to be successfuloPayne-Aldrich Bill of 1909 Philippines received a 300,000-ton duty-free

share of the US sugar market.oUnderwood-Simmons Bill, weight limitation was dropped.oDespite all these, Philippines still competed with Cuba, Puerto Rico, andHawaii.

Quality gap: from low-grade sugar to ahigher degree of purity

VII. The world market demanded a higher degree of purity of sugar.y Charles Howard invented the steam-heated vacuum pan that boiled suagr syrup

more efficiently and quickly at a lower temperature.

y Invention of the centrifugal separator, a steam-driven cylinder that removedmolasses from crystal sugar cleanly and rapidly, followed.

y By the late 19th century, Java, Hawaii and Cuba were already using theseinnovations. (cost was high)

y The Philippines remained the last major world producer of cane sugar withoutcentrals.

oPhilippines used steam,-driven metal grinders; hornoseconomicos(burned ground cane refuse as fuel) and batteries of open kettles. Thefirst two used in tandem produced more efficient extraction rates of juicefrom cane; the latter improved the polarization of mat sugar.

y By the latter part of century, Negros turned out a good sugar with an 85average polarization (degree of sucrose content) that compared favorable withthe pilon sugar of Pampanga; neither kind matched the 96 of centrifugal sugar.

y The introduction of cheaper equipment was undertaken byLoney and Gaston onNegros and de la Gironiere, Delaunay and Vidie on Luzon.

y The big trading houses supplied machinery and financed its purchase whennative planters followed the lead of those innovators.

y The refinerys operation at Malabon was limited in size by the circumscribedmarket for fully refined sugar.

y For the most part, Philippine growers did not even care to invest in betweenfarming techniques to improve their profits, and the Philippines possessed thelowest yield per hectare of all the major sugar-producing regions of the world..


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oNot until well into the twentieth century did planters begin to fertilizetheir fields, rotate and irrigate their crops, and select the best cane forplanting.

Sugar depressionVIII. The major casualty of sugar depression of the early twentieth century was the pilon

industry of centralLuzon and of Pampanga.

y Pampangan farmers damaged themselves by lacing their sugar with molasses.y They became more dependent on the Manila fardarias to raise the quality of

their product.

y Annual exports from Manila to North America and England began to dropdrastically, while Iloilo shipments ofVisayan mat to those destinationscontinued to rise.

IX. In the next ten years, Pampanga began to move away from pilon when someplanters switched to making mat sugar by hiring sugar maestrillos expert in theVisayan boiling technique.

y Other farmers commenced sending their cane to the newly erected central atCanlubang, Laguna, despite the serious loss of sucrose content caused by the

delay between harvesting and grinding.

Obstacles in establishing Philippine centrals

y Problem of cane supply.y Large, modern mills required that ample stocks of sugar cane be delivered

throughout the milling season, and most centrals in other countries possessedguaranteed stocks through ironclad lease arrangements or through ownership ofthe surrounding fields.

y In the Philippines, acquisitition of large tracts of public land was illegal, andthere were insufficient private estates for purchase or lease.

y Participants in the Philippine sugar industry generally lacked the resources andincentives to purchase expensive factories.

y Local lending institutions could not supply money for equipment.y Private families feared making big investments on their own.y Lack of expertise became a bigger problem.

Solving the problem of cane supply

y Allowing corporations to bypass the Public Land Act 1902 (which prohibitedgranting f public lands greater than 16 hectares to individuals and 1,024hectares to corporation) and to buy extensive tracts of land formerly owned bythe religious orders.

y With the aid of Philippine Commissioner Worcester, 18,000 hectares of unusedfriar land in Mindoro was bought.A sugar central was erected thereafter.

o The project failed because of malaria and inadequate work force.However, this set a precedent a central capable of milling 1500 tons of

cane daily.y California interests under Ehrman and the Pacific Commercial Company

acquired 8,000 hectares of Calamba and Binan estates in Laguna and usedthese for erecting a large central at Canlubang.

o The enterprised flourished that another central was put up in DelCarmen, Pampanga.

y The real answer to the problem was the establishment ofSan Carlos MillingCompany.


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Solving the difficulty of financing centrals

y Large infusions of foreign capital, mainlyAmericany At Canlubang, California interests came to the fore, and with Pasumil, the

Spreckels West Coast refining interests joined Ehrman in supplying capital

NegrosOccidental: TheFormation of a Plantation Society

X. The peopling and exploitation of the western Negros wilderness was much like thedevelopments happening on the global frontier

y Between 1845-1918, annual production of sugar increased while populationrose by more than 1.021 percent

y Haciendas grew from jungles, and amidst these haciendas, permanent townsrose

y Migrants from depressed areas such as Bohol, Cebu and Antique moved toNegros, established homesteads and grew rice and corn.Many wereabsorbed into haciendas.

Factors that initiated Developments inNegros

y Negros did not begin to attract large numbers of hacienderos because of herereasons:

o the threat ofMoro coastal raiders, before they were defeated in 1857;o Negros reputation as lacking social and physical amenities (but the

Recollect friars practice of religious control and the subsequenteconomic developments have addressed these concerns);

o and the lack of necessity to develop Negros (the arrival ofBritishcotton in the 1850s compromised the native cloth industry, Chinesemestizo merchants looked to the increasing demand for sugar as analternative business)

y British Vice-Consul Loney also initiated developments througho New British milling equipmento Provision of low-interest rate for paymento Construction of better port facilitieso He established his own export-import company in 1860 and acquireda haciendao Took cash loans from an American firm, initiating more firms to enter

sugar business, which encouraged growth of business in Negroso These firms became the biggest suppliers of imported goods and

machinery, as well as credit to planters

y Iloilo opened to international commerce in 1855, allowing exporters tobypass Manila and reducing shipping costs.Iloilo became main port forNegros

y Expanding world demand from made 1850-1860 the time of greatestintrusion of Negros into sugar industry

TheNegros Planters

y Entrepreneurs fell into two categories: actual settlers and speculators (whoacquired estates through other means, legal or illegal.)

y Chinese merchants, Filipino revolutionaries, and Spanish mestizoscomposed the entrepreneurs. People usually moved to areas where they hadpre-existing contacts.

y A few rich families became composed most of the Negros plantation elitePlantation Lands


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y Land was usually along rivers or streams, rice fields, or unused property oflocal officials, although some were established in the jungles. Negros mostlygrew out of edges of prior settlements

y New haciendas and towns were devoid of amenities found in outside world,and there were many health risks such as malaria involved.

y The matter of titling lands was informal given the absence of governmentsurveys, records, land offices

y Purchase agreements involved drawings and descriptions, no exactspecifications outlining property.Lot size was described by how muchseedlings it took to fill the land.

y Acts of buying and selling became a form of land recognition/ownershipwhen government introduced land registration

Legitimation for Acquisition of Large Agricultural Lands

y Began in mid -1870s, when Spanish government made a system fordistributing unoccupied public lands belonging to the crown (realangas)

y Petitioners could purchase lands or claim them with proof of prior cultivation(denuncia)

y Lands offered at very low prices accrued wealth for those who purchasedthem

y USRegime sought to follow the American ideal of small land for farmers.Homestead Act of 1902 granted maximum of 16 hectares of public land perindividual, which was not very generous compared to before

y Actual registering of land in Negros was problematic. There was nofunctioning land office, and the process of surveying and establishing cleartitles for lands proved to be cumbersome. Few owners had titles before 20thcentury

y Americans introduced Torrens title, but this was still troublesome becauseowners wanted to avoid tax extortion on registered lands.

y The government instituted system to force everyone to register (survey,lawsuits, etc)

y Negros occidental was one of first few surveyed, and by 1922, titles for mostof the public lands were settled by litigation

y In the process, planters evicted farmers (original inhabitants) throughvarious nefarious ways(land grabbing, usurpation):

o Falsified documents obtained through friends and relatives in officeo Violence

y Confronted with these pressures, peasant farmers were forced to return tothe wilderness or work under the land-grabbing hacienderos

y Plight of aboriginal inhabitants was worse, they had no formal titles and soall their lands became public. To resist the government meant extermination.

They escaped into the interior mountains to practice their ways and avoidbeing part of the plantation workforce

The Plantation Business

y Investing in working plantations became a way to enter the sugar industryy Other forms of business such as credit, transportation of sugar to markets,

and sugar brokerage cropped up

y American firms provided loans to planters.y Lenders preferred land as collateral, and mortgages usually went on large

properties valued in thousands of pesos. Notarial data shows that there werefew foreclosures, reflecting the high reliability on the part of mortgages.

y Creation ofAgricultural Bank of the Phil Islands, and its successor, PNB in1916 gave planters access to credit on more favorable terms. Government-


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sponsored lending institutions gave larger loans on less interest, but thisonly partially alleviated the credit problem because they did not have enoughfunds and they demanded a Torrens title.

y Credit supply persisted as a lucrative business activity.Influential familieswith capital conducted business from Iloilo while hacienderos in Negrosdepended on loans from these wealthier businessmen.Lenders profited from

hard times, and could invest in promising times. Within the planter class,considerable differentiations in wealth existed and the gap steadily grewwider.

Haciendas

y Haciendas were at the heart of economic and social life in Negros Occidental.Census used these as units of enumeration (together with barrios).Haciendasvaried in size, from a few to several hundred.

y Lack of transportation made haciendas into isolated, self-containedcommunities, developments of roads have been initiated but until today, manyhaciendas are hard to reach

y Absentee ownership became a common practice in Negros. Each hacienda had aplanter in charge, a leaseholder, or an administrator.

y There were various lease holding options:o Straight cash rentals: least favored choice,provided tenants with least

protection against fluctuating priceso Acsa or agsador system-((lease managmenet) offered many protections

not available under cash tenant system.Acsas leased particular portionsof haciendas, supervising laborers and delivering cane to the mills.Heshared his produce with the owner.Acsas act as planters, takingcomplete responsibility.

y The most common system of sugar farming was the management of salariedworkers.

o Administrator kept the books, oversaw machine shop, took care of thetools, machines, and oversaw foremen, who were in charge of sometimeshundreds of permanent employees ho tilled fields, operated mills.

y There was a huge social and economic gap between the hacendero families andtheir workers (wealth, education, mobility,, wider economicopportunity for theformer)

y Workers in hacienda:o Encargados: estate supervisor-oversees everything (clerical, logistical,

managerial matters)o Cabos- carried out encargados orderso Maestrillos- supervised crystallization of muscovado sugar.o Machinistso Clerkso Bulk consisted of semi-skilled workers, as young as six to advanced age,

who maintained fields, looked after carabaos (Dumaan). They lived inNipa houses and worked all year round, receiving very little pay.

Dumaan usually purchase necessities from stores set up by haciendas,the interest charges of which even generate debt for them. Thesesubsistence workers were so tied to the hacienda that sales not onlyincluded estates, buildings, machinery, and crops but also the Dumaanlabor force.

y There was originally no work force available, so haciendas had to importlaborers, hire aboriginals and peasants. Workers usually lived and worked inhaciendas for life.


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y Judicial officers and executive suthorities were usually taken from hacienderos,and so legal controls favored haciendas.

y Workers remained in haciendas because of debt and lack of alternatives, butalso because of force exerted upon them by planters. Two codes of law existed inNegros: one for workers and one for planters. Planters used guns andintimidation to subdue workers, and the latter seldom escape from this

oppressive system.y Absence of societal and governmental restraints in a climate of unfettered

capitalism permitted the lavish expenditure of resources, land-grabbing, andabuse of labor to go unquestioned.

Pampanga: TheFormation of a Tenant Society

XI. Sugar cultivation moved to dryer, higher ground. Wherever sugar cultivation waspossible, the Capampangans took up the endeavor. Pampanga did not have thesame changes as Negros as a result of the upturn in the sugar industry. Thepopulation did not grow at a substantial rate, and the number of towns did notchange.In places where sugar factored in though, Pampanga experiencedpopulation shifts.

The opening of the Pampanga portion of the Manila-Dagupanrailroad gave directaccess to the port city for sugar. The developments from jungles to plantations weresimilar to Negros, but one striking difference is that Pampangas growth was underan indigenous elite. Capampangan planters had grown cane and produced sugar fora long time. This indigenous elite was subsequently infilitrated by Chinese, Spanishmestizos.

Consequences of Settlement Pattern

y Pampangan elite were bound by common ethnic tie, relied more on pacto deretro for capital (rather than outside sources)- pacto de retro, between rich andpoor, may be used to acquire land, but between equals, it could serve to raisecash for additional agricultural and commercial endeavors. This opened up

many options to both buyer and seller.y Farmers tended to have scattered holdings rather than big haciendas. The

tendency among landowners is to sire large families and the prevalent system ofequal inheritance among children altered the size of the lands owned.

y Owners usually owned both rice and sugar plantations, to cope with changingsugar markets.

y Capampangans transferred their traditional labor system to newly tamed lands.Farmers rarely profited and they seldom were able to better their socio-economiccondition.

y Pampangenos carried with them old forms of sugar farming. Negros grewproduction 751 times, compared to Pampangas 5.8 times. Negros was moreresponsive to public demands.

Pampangay Sugar upturn changed Pampanga in many ways- the landowning class became

more business-oriented regarding farming, it brought prosperity amidsteconomic depression in other places, and it widened the socio-economic gapbetween rich and poor.

y Landed elites chose to focus on their business rather than entering local politics,but those who held positions were still hacienderos, or those at their service.

y Access to education improved the status of the dominant economic and politicalpowers even more. The poor seldom had the chance to complete their education.


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Americans focused on schooling, but the beneficiaries were the children of therich. This education was used by the rich for their own legal benefit. Thecadastral system was completed by 1935 and the program worked for the landedelites.

y Because Pampanga was smaller and had better roads, there was more focus onsocial life (town centers, markets, stores).Social getherings also created an

exclusive environment for the rich.O

n the other end of the spectrum, thepeasants experienced no improvement in thei socio-economic status.Sugar and Philippine Society, 1836-1920

XII. The sugar business was vulnerable because it depended on foreign markets. Thevery status achieved by the industry worked to the detriment of other Philippineenterprises.

y Sugar soaked up much of the private/ governmental credit that could havegone to other businesses.

y Because of high demands, hacienderos encouraged produce of sugar to thedetriment of other crops like rice (which contributed to shortages)

y It served to solidify political and colonial hierarchies in society (elite families,corruption)

y Institutuionalized gaps between rich and poor preclude any meaningfulpolitical participation by the oppressed, compromises idea of participativedemocracy

y Colonizers treated haciendas too nicely, (minimal taxation), therefore, nosufficient revenues were raised to develop agriculture industry

y In Pampanga and Negros, there has been no development since, and bothhave been stuck in the pitfalls of their respective hacienda systems.

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