Cebu was known to be a thriving entrepôt even before Magellan came in 1521. When he arrived in Cebu, the chieftain demanded tribute for his landing like what was done with other foreign vessels that came to trade in Cebu. Magellan was also informed that another foreign vessel just left before he arrived.
Records from other sources would show that many Chinese vessel would come to Cebu because of its gold and other precious stones that they exchange with their goods, mostly porcelain or pottery products. Other than gold, the Chinese also traded their goods for food and even slaves.
The Legaspi expedition that was sent by the King of Spain from New Spain or Mexico arrived in Cebu in 1565 and took it for the crown of Spain. From Cebu, Legaspi sent the first boat back to Mexico. Fray Urdaneta, who commanded the ship, successfully made that trip following the route that was more inclined to the north before turning to Mexico instead of their route in coming to the Philippines more inclined towards the south.
Urdaneta’s return trip from Cebu to Mexico turned out to be the beginning of the Galleon trade between the Philippines and Mexico. This did not last long, however. Owing to harassments by the Portuguese and the ensuing food shortage, Legaspi transferred his power base from Cebu, first to Panay in 1569, and finally to Manila in 1570 after defeating the local defenders.
Thus, ended the incipient Cebu-New Spain connection and started the Galleon trade between Manila and Acapulco.
After the Spaniards left, Cebu became mainly as an administrative, religious, and military base of the Spaniards south of Manila. Other than that, Cebu was nothing economically compared to Manila, which prospered with the Galleon trade.
While highly profitable, the galleon trade did not benefit Cebu and the rest of the country because most of the goods loaded in the galleon came from China.
When the business-minded Spaniards in Cebu complained of this unfavorable trade arrangement, a royal decree was issued on April 23, 1594 allowing Cebu to send one ship a year to New Spain. The number of ships sent from Cebu is not known but it was reported that one ship that left in 1597 was lost to the sea.
This and other losses and the many restrictions placed in the decree made the Cebu-New Spain venture less profitable. Among the restrictions was for Cebu to send to New Spain only beeswax, cotton table clothes, bananas, and other fruits from the province. Dealing in silk and other goods from China was prohibited.
The Cebu-New Spain trade finally ended in 1604, putting Cebu very much behind in development to Manila for the next 200 years.
The Manila galleon trade ended in 1815. It started when King Charles initiated the policy of removing restrictions in trade between Spain and her colonies. Between 1776 and 1783, the king dispatched frigates direct from Spain for a voyage to conduct direct trade with Manila, bypassing Mexico. Then in 1785, he chartered the Royal Company of the Philippines to promote direct trade between Spain and the Philippines and other Asian countries.
The opening of Panama Canal in 1814, which shortened travel from the Philippines to Spain, hastened the end of the Galleon trade. The final nail came when Mexico obtained independence from Spain in 1821.
With the end of the galleon trade, the Spanish monarch abolished the Royal Company of the Philippines and opened the port of Manila in 1834 to unrestricted commerce with all foreign nations. This benefited the traders from Cebu who can now ship their goods to Manila, particularly sugar, it’s main export. It also allowed the Port of Cebu to become busy again with strong links to Manila and the different islands in the Visayas and Mindanao.
However, the real development of Cebu came when the port of Cebu was opened to foreign vessels in 1860.
The opening of the Port of Cebu further encouraged the planting of more areas to sugar in Cebu’s western and northern flatlands and other products in the other towns of Cebu not fitted for the production of sugar, like abaca, tobacco, coffee, and cotton.
Thus, finally began the real development of cash economy of Cebu that continued with the coming of the Americans, who put up a new port in Cebu that allowed boats to dock alongside it instead of anchoring away from the shores as was done during the Spanish period.
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