1. The Entry of American Capital - Insular Lumber Company
Meanwhile, sometime in 1907 the Insular Lumber Company, reputed to be the biggest hardwood mill in the world, was established in what is now called Barangay Fabrica. Though measures to prevent the denudation of Sagay’s rich forest were made, reforestation program failed. Later, the denuded areas were converted mostly into sugarcane fields and some into corn fields. With the exhaustion of the forest resources of Sagay, the ILCO - Philippines was phased out in 1975 and later transferred to Hinoba-an.2. Lopez Sugar Corporation
Another major industrial development give Sagay another big step forward the establishment of Lopez Sugar Corporation in the 1920’s. Also during these years, sugar, copra, lumber and fishing became the important source of income for the inhabitants. The economic growth of Sagay brought about influx of migrants from Iloilo, Cebu and Bohol. This trend made Sagay a melting pot of ethnically different but equally hardworking Cebuanos and Ilonggos.With this developments, business and industry flourished. Leading both sectors were big businessmen and industrialists like the Lopezes, the Cuaycongs, the Jizons, the Gamboas, and the Vasquezes. The sugar boom brought the fore old timers in the industry like the Pueys, the Nichols, the Katalbases, and the Tupases, which branched out to the Marañons, the de la Pazes, the Ibrados and the Libo-ons.

1. The Japanese Base:
The second world war brought to a temporary halt the progress of Sagay. The then incumbent Mayor Jose B. Puey, Sr. went on leave and left the administration of the municipality to Vicente Katalbas. The factories were destroyed and the economy was in shambles.A. Eusebio Lopez Memorial School Building - Barangay Paraiso
The school serves as the incarceration area of captured American pilots and soldiers. It also served as the headquarters of Fourth Flight Division of the Japanese Imperial Airforce which airfield was located in Pula-Bunglas area in Barangay Malubon. During the last days of the war, the Fourth Flight Division of the Japanese Imperial Airforce organized a kamikaze or suicide units stationed here and in Bacolod. Known later as the Third Regiment Suicide Corps, it was headed by Major Tsuneharu Sirai with Capt. Tetsuzu Kimura as his Chief Staff
Officer, of its 59 pilots and crews, 30 were killed in the battle of Leyte Gulf which they played a major role as kamikaze pilots. The Pula - Bunglas area of Barangay Malubon served as the Japanese landing field for the Fourth Flight Division. It was also a site where guerrillas and civilians, after they were identified by Japanese spies as guerrillas member or collaborators were forced to dig holes consequently executed and buried. Old timers believed that almost 1,542 people were buried here.B. Barrio 3 Wharf, Fabrica
Served as the transport point of processed lumber destined to Japan from Insular Lumber Company and also a docking area of Japanese supply ship during the war torn years. The Iglanggam Bridge at Barangay Tadlong served as the dumping site of executed guerrillas and civilians, known also as the site where confiscated money, especially silver peso coins encased in concrete blocks were dumped by the retreating Japanese soldiers.C. Balibag Hill, Lopez Jaena
It was in this place where the set of resistance government of Free Sagay under Mayor Tomas Londres (appointed by Island Governor Alfredo Montelibano, Sr.) was established. It was also known as tabo-an or market place during the war and in 1944 a group of Japanese soldiers man-slaughtered about 27 homeguards or “toltog” units of the guerrilla. After the mass killing, the Japanese soldiers set the whole area on fire, burning the shanties and the dead.D. Big House, Central Lopez, Paraiso
It was in this house where the set of Japanese “puppet” government under Vicente Lacson Katalbas was established. Also a Japanese barracks and checkpoint. A Japanese anti-aircraft still can be found inside the ground of the said house. At Brgy. Poblacion II, Japanese zero fighters left bullet holes when they intended to destroy the water supply of the people during the last days of the war. Holes from 60 mm machine-guns left an indelible mark on the water tank.2. The USAFE Base
A training site of USAFE under the supervision of Lt. Dominador Gaerland was established at Tangnonon, Barangay Fabrica at the ancestral home of Lopez Kabayao. On July 26, 1942 President Delano Roosevelt of the United States of America ordered a national mobilization in the Philippines and on August 23, 1942, the first group of reservist in Negros were called on duty by virtue of Philippine Army HQ order of August 4 and they were trained here. The first group reported in the said mobilization camp constituted the 71st Infantry Regiment.3. The Japanese Occupation
During the Japanese occupation, two Civil Governments existed in Sagay. Under the Japanese national government of Jose Laurel, Sr., Vicente Katalbas was appointed mayor, while the resistant government of the province, headed by Alfredo Montelibano, Sr., as governor appointed Tomas Londres as Mayor whose seat of government is in the mountain areas of Sit Balibag, Lopez Jaena. Their term however, abruptly ended when the American forces liberated the province from the Japanese at the early part of 1945. When Serge OEMs, Sr., as vice-president to Manuel L. Queen who died during the war took over the helm of the national government Teodoro Lopez, Sr., was appointed Mayor of Sagay. During his short term Teodoro Lopez, Sr., concentrated in rebuilding the administrative machinery of the local government.

The first election held right after the second world war made Jose B. Puey, Sr., and Amalio Cueva, Sr., Mayor and Vice-Mayor respectively. However, shortly after, Mayor Jose B. Puey, Sr., was appointed member of the Provincial Board of Negros Occidental thus Vice-Mayor Amalio Cueva, Sr., took over the Municipal leadership and through his initiative the seat of government was transferred to its present site, Dalusan.Incidentally, the transfer signaled the diminishing importance of sea travel and the take over of overland transportation as the conveyor of progress and development. Significantly, in this regard, Old Sagay (the previous seat of government) is an old coastal center of population while Dalusan is a late highway occurrence.

The transfer was made possible partly through land donations for the town site by Doña Rosario Cooper and heirs of the late Clayton Nichols. School, Markets and commercial establishments sprang up overnight and postwar Sagay was again on the road to prosperity. Jose B. Puey, Sr., remained Provincial Board Member until his election as congressman for the first District of Negros Occidental in 1953.

In the late 1950’s two favorite sons of Sagay were in the forefront of Negros politics, Jose B. Puey, Sr. (Congressman from 1953 to 1957) and Alfredo G. Marañon, Sr. (Board Member from 1956 to 1959). Because of these two, massive provincial and national aids were extended to Sagay. More roads and school buildings were constructed, thousands of hectares of logged off area of the Insular Lumber Company were planted to coconut trees and sugarcane. Sherman Hill near Brgy. Bato was discovered to contain rich deposits of highest silica. Seaward, the growing markets for sea products brought about unprecedented boom in the fishing industry for which the coastal waters of Sagay proved to equal the demand. The municipal population rose to more than 60,000 and the revenue increased.After Mayor Amalio Cueva, came Tereso Canoy, Bruno Cueva, Sr. and Quintin Katalbas in this order.In 1963, Jose H. Puey, Jr. was elected mayor of Sagay. The income continued to rise. More schools were built and more linking the barangays to the town capital were constructed. The inefficient electrical system was updated, fire fighting equipment and the police units were modernized. It was during this time when the older Marañon began entertaining the idea of putting up another sugar mill in Sagay which farmers can partly own. He campaigned for support but there was too much opposition even some of his close friends. Nevertheless, his idea became a reality when in 1967, shortly after his death, Sagay Central, Inc. was born. Mr. Marañon’s dream was made real through the help of President Ferdinand E. Marcos and then the Philippine National Bank President Roberto S. Benedicto both share his vision for Sagay. With the new sugar mill at Barangay Bato, new areas were opened and planted to sugarcane. Today hundreds of small farmers are being benefited by the new sugar mill factory. The then Mayor now Congressman Alfredo G. Marañon, Jr. assumed the political leadership of Sagay in 1972. He came to office at the most critical turn of the Philippine history when the country was in economic disarray, in political turmoil and in moral breakdown. Yet the new leadership, equipped with a youthful outlook and vigor, proved itself to the challenged of time.Under the administration of Mayor Marañon, Sagay acquired a new town hall, a municipal gymnasium, a livestock auction market, public markets for number of barangays and municipal wharves in barangays Vito and Old Sagay. He caused the organization of Sagay Water District in 1978. He affected the purchase of a municipal subdivision for the municipal employees in 1979. These achievements by themselves, have helped catapult Sagay to a first class C municipality (the highest in entire Negros). Yet Mayor Marañon, himself if asked what he considers his most important achievement, is often heard to say: “It is our successful negotiations of the sponsorship contract with the District of Osterholz in West Germany.” This self evaluation by Mayor Marañon, of his performance on office does not surprise those who have some insight into the background and history of the Sponsorship Program.