The Capital Markets of the Manila Trade

The large volumes of coined silver reaching Manila every year and the difficulty of developing a local export-oriented economy due to the high demand for the peso worked together to limit the investment options of merchants in the city. However, it similarly facilitated the emergence of a capital market focused on financing the trade of the city. This financial market arose using the infrastructure provided by religious associations such as brotherhoodsbrotherhoods and lay confraternitieslay confraternities, and used endowment funds known as obras pías as the primary vehicle to structure investments. This institutional framework enabled for the expansion of capital supply, allowed individuals unrelated to the trade to pool their savings and transform them into working capitalcapitalworking for trade finance, and in the process, linked the provision of public goods in the city to the performance of the trade, making the city of Manila a stakeholder in merchants’ commercial operations.