Trade of the Islands
Its Early History
From within a year after the foundation of the Colony up to the
second decade of last century direct communication with Mexico was
maintained by the State galleons, termed the _Naos de Acapulco_. The
first sailings of the galleons were to Navidad, but for over two
centuries Acapulco was the port of destination on the Mexican side, and
this inter-communication with New Spain only ceased a few years before
that Colony threw off its allegiance to the mother country. But it was
not alone the troubled state of political affairs which brought about
the discontinuance of the galleons' voyages, although the subsequent
secession of Mexico would have produced this effect. The expense of
this means of intercourse was found to be bearing too heavily upon
the scanty resources of the Exchequer, for the condition of Spain's
finances had never, at any period, been so lamentable.
The Commander of the State _Nao_ had the title of General, with a
salary of P40,000 per annum. The chief officer received P25,000 a
year. The quarter-master was remunerated with 9 per cent, on the value
of the merchandise shipped, and this amounted to a very considerable
sum per voyage.
The last State galleon left Manila for Mexico in 1811, and the last
sailing from Acapulco for Manila was in 1815.
These ships are described as having been short fore and aft, but
of great beam, light draught, and, when afloat, had a half-moon
appearance, being considerably elevated at bows and stern. They were
of 1,500 tons burden, had four decks, and carried guns.
The Gov.-General, the clergy, the civil functionaries, troops,
prisoners, and occasionally private persons, took passage in these
ships to and from the Philippines. It was practically the Spanish Mail.
The Colony had no coin of its own. [112] It was simply a dependency
of Mexico; and all that it brought in tribute and taxes to its Royal
Treasury belonged to the Crown, and was at the King's disposal. For
many years these payments were made wholly--and afterwards
partially--in kind, and were kept in the Royal Stores. As the junks
from China arrived each spring, this colonial produce belonging to the
Crown was bartered for Chinese wares and manufactures. These goods,
packed in precisely 1,500 bales, each of exactly the same size,
constituted the official cargo, and were remitted to Mexico by the
annual galleon. The surplus space in the ship was at the disposal of
a few chosen merchants who formed the "_Consulado_,"--a trading ring
which required each member to have resided in the Colony a stipulated
number of years, and to be possessed of at least eight thousand pesos.
For the support of the Philippine administration Mexico remitted
back to Manila, on the return of the galleon, a certain percentage of
the realized value of the above-mentioned official cargo, but seeing
that in any case--whether the Philippine Treasury were flourishing
or not--a certain sum was absolutely necessary for the maintenance
of the Colony, this remittance, known as the "_Real Situado_," or
royal subsidy, was, from time to time, fixed. [113]
The Philippine Colony was therefore nominally self-supporting, and
the _Situado_ was only a guaranteed income, to be covered, as far as
it could be, by shipments of foreign bartered manufactures and local
produce to Mexico. But, as a matter of fact, the Mexican subsidy
seldom, if ever, was so covered.
By Royal Decree of June 6, 1665, the Mexican subsidy to the Philippines
was fixed at P2,500,000, of which P2,000,000 was remitted in coin
and P500,000 in merchandise for the Royal Stores. Against this was
remitted value in goods (Philippine taxes and tribute) P 176,101.40
so that the net Subsidy, or donation, from Mexico was P 2,323,898.60.
Hence, in the course of time, coin--Mexican dollars called
_pesos_--found its way in large quantities to the Philippines, and
thence to China.
The yearly value of the merchants' shipments was first limited to
P250,000, whilst the return trade could not exceed P500,000 in coin
or stores, and this was on the supposition that 100 per cent. profit
would be realized on the sales in Mexico.
The allotment of surplus freight-room in the galleon was regulated by
the issue of _boletas_--documents which, during a long period, served
as paper money in fact, for the holders were entitled to use them for
shipping goods, or they could transfer them to others who wished to
do so. The demand for freight was far greater than the carrying power
provided. Shipping warrants were delivered gratis to the members
of the _Consulado_, to certain ecclesiastics, and others. Indeed,
it is asserted by some writers that the Governor's favourites were
served with preference, to the prejudice of legitimate trade.
The Spaniards were not allowed to go to China to fetch merchandise
for transhipment, but they could freely buy what was brought by the
Chinese. Indian and Persian goods uninterruptedly found their way to
Manila. Spanish goods came exclusively _via_ Mexico.
The mail galleon usually sailed in the month of July in each year, and
the voyage occupied about five months. Very strict regulations were
laid down regarding the course to be steered, but many calamities
befell the ships, which were not unfrequently lost through the
incapacity of the officers who had procured their appointments
by favour. For a century and a half there was practically no
competition. All was arranged beforehand as to shape, quantity, size,
etc., of each bale. There was, however, a deal of trickery practised
respecting the declared values, and the _boletas_ were often quoted
at high prices. Even the selling-price of the goods sent to Mexico
was a preconcerted matter.
The day of the departure of the galleon or its arrival with a couple
of millions of pesos or more, [114] and new faces, was naturally one
of rejoicing--it was almost the event of the year. A _Te Deum_ was
chanted in the churches, the bells tolled, and musicians perambulated
the streets, which were illuminated and draped with bunting.
So far as commercial affairs were concerned, the Philippine merchants
passed very easy lives in those palmy days. One, sometimes two, days
in the week were set down in the calendar as Saint-days to be strictly
observed; hence an active business life would have been incompatible
with the exactions of religion. The only misadventure they had to fear
was the loss of the galleon. Market fluctuations were unknown. During
the absence of the galleon, there was nothing for the merchants to do
but to await the arrival of the Chinese junks in the months of March,
April, and May, and prepare their bales. For a century and a half this
sort of trading was lucrative; it required no smartness, no spirit of
enterprise or special tact. Shippers were busy for only three months
in the year, and during the remaining nine months they could enjoy
life as they thought fit--cut off from the rest of the world.
Some there were who, without means of their own, speculated with the
_Obras Pias_funds, lent at interest. [115]
The Philippine merchants often lost the value of their shipments in the
State galleons by shipwreck or seizure by enemies. Mexico frequently
lost the Philippine remittances to her, and the specie she sent to
the Philippines. The State galleon made only one voyage a year there
and back, if all went well; but if it were lost, the shipment had to
be renewed, and it often happened that several galleons were seized
in a year by Spain's enemies.
The abortive attempt to annex the British Isles to the Spanish Crown in
1588 brought about the collapse of Spain's naval supremacy, enabling
English mariners to play havoc with her galleons from America. The
Philippine Islands, as a colony, had at that date only just come into
existence, but during the series of Anglo-Spanish wars which preceded
the "Family Compact" (_vide_ p. 87), Philippine-Mexican galleons
laden with treasure became the prey of British commanders, notably
Admiral Anson. The coasts were beset by Anson's squadron. He was the
terror of the Philippines from the year 1743. His exploits gave rise
to consternation, and numerous councils were held to decide what to
do to get rid of him. The captured galleon _Pilar_ gave one-and-a-half
million pesos to the enemy--the _Covadonga_ was an immense prize. All
over the Islands the Spaniards were on the alert for the dreaded foe;
every provincial Governor sent look-outs to high promontories with
orders to signal by beacons if the daring Britisher's ships were seen
hovering about, whilst, in Manila, the citizens were forewarned that,
at any moment, they might be called upon to repel the enemy.
Not only in fleets of gold-laden vessels did Spain and her dependencies
lose immense wealth through her hostile ambition, for in view of the
restrictions on Philippine trade, and the enormous profits accruing
to the Spanish merchants on their shipments, British, Dutch, French,
and Danish traders competed with them. Shippers of these nationalities
bought goods in Canton, where they established their own factories,
or collecting-stores. In 1731 over three millions of Mexican dollars
(pesos) were taken there for making purchases, and these foreign ships
landed the stuffs, etc., in contraband at the American ports, where
Spaniards themselves co-operated in the trade which their absolute King
declared illicit, whilst the traders considered it a natural right.
As the Southern (Peninsula) Spanish merchants were helpless to stay
this competition, which greatly affected their profits, their rancorous
greed made them clamour against the Philippine trade, to which they
chose to attribute their misfortunes, and the King was petitioned to
curtail the commerce of this Colony with Mexico for their exclusive
benefit. But it was not Spanish home trade alone which suffered:
Acapulco was so beset by smugglers, whose merchandise, surreptitiously
introduced, found its way to Mexico City, that, in latter days, the
Philippine galleons' cargoes did not always find a market. Moreover,
all kinds of frauds were practised about this time in the quality of
the goods baled for shipment, and the bad results revealed themselves
on the Mexican side. The shippers, unwisely, thought it possible to
deceive the Mexicans by sending them inferior articles at old prices;
hence their disasters became partly due to "the vaulting ambition that
o'erleaps itself and falls on t'other side." The Governor commissioned
four of the most respectable Manila traders to inspect the sorting
and classification of the goods shipped. These citizens distinguished
themselves so highly, to their own advantage, that the Governor had
to suppress the commission and abandon the control, in despair of
finding honest colleagues. Besides this fraud, contraband goods were
taken to Acapulco in the galleons themselves, hidden in water-jars.
In the time of Governor Pedro de Arandia (1754-59) the 100 per
cent. fixed profit was no longer possible. Merchants came down to
Acapulco and forced the market, by waiting until the ships were obliged
to catch the monsoon back, or lie up for another season, so that often
the goods had to be sold for cost, or a little over. In 1754 returns
were so reduced that the _Consulado_ was owing to the _Obras Pias_
over P300,000, and to the _Casa Misericordia_ P147,000, without any
hope of repayment. The _Casa Misericordia_ lent money at 40 per cent.,
then at 35 per cent., and in 1755 at 20 per cent. interest, but the
state of trade made capital hardly acceptable even at this last rate.
Early in the 18th century the Cadiz merchants, jealous of the
Philippine shippers, protested that the home trade was much injured by
the cargoes carried to Mexico in Philippine bottoms. So effectually
did they influence the King in their favour that he issued a decree
prohibiting the trade between China and the Philippines in all
woven stuffs, skein and woven silk and clothing, except the finest
linen. Manila imports from China were thereby limited to fine linen,
porcelain, wax, pepper, cinnamon, and cloves. At the expiration of six
months after the proclamation of the decree, any remaining stocks of
the proscribed articles were to be burnt! Thenceforth trade in such
prohibited articles was to be considered illicit, and such goods
arriving in Mexico after that date were to be confiscated.
By Royal Decree dated October 27, 1720, and published in Mexico by the
Viceroy on February 15, 1724, the following was enacted, viz.:--That
in future there should be two galleons per annum, instead of one
as heretofore, carrying merchandise to Acapulco, each to be of 500
tons. That the merchandise sent in the two was to be of the value of
P300,000 precisely in gold, cinnamon, wax, porcelain, cloves, pepper,
etc., but not silks, or stuffs of any kind containing silk, under
pain of confiscation, to be allotted in three equal parts, namely,
to the Fiscal officer, the Judge intervening, and the informer, and
perpetual banishment from the Indies of all persons concerned in the
shipment. That the number of Manila merchants was to be fixed, and any
one not included in that number was to be prohibited from trading. No
ecclesiastic, or professor of religion, or foreigner could be included
in the elected few, whose rights to ship were non-transferable. That if
the proceeds of the sale happened to exceed the fixed sum of P600,000,
on account of market prices being higher than was anticipated,
only that amount could be brought back in money, and the difference,
or excess, in goods. [If it turned out to be less than that amount,
the difference could not be remitted in cash by Mexican merchants for
further purchases, the spirit of the decree being to curtail the supply
of goods from this Colony to Mexico, for the benefit of the Spanish
home traders. The infringer of this regulation was subject to the
penalties of confiscation and two years' banishment from the Indies.]
By Royal Decree of the year 1726, received and published in Manila
on August 9, 1727, the following regulations were made known,
viz.:--That the prohibition relating to silk and all-silk goods was
revoked. That only one galleon was to be sent each year (instead of
two) as formerly. That the prohibition on clothing containing some
silk, and a few other articles, was maintained. That for five years
certain stuffs of fine linen were permitted to be shipped, to the
limit of 4,000 pieces per annum, precisely in boxes containing each
500 pieces.
The Southern Spanish traders in 1729 petitioned the King against the
Philippine trade in woven goods, and protested against the five-years'
permission granted in the above decree of 1726, declaring that it
would bring about the total ruin of the Spanish weaving industry,
and that the galleons, on their return to the Philippines, instead of
loading Spanish manufactures, took back specie for the continuance
of their traffic to the extent of three or four millions of pesos
each year. The King, however, refused to modify the decree of 1726
until the five years had expired, after which time the Governor was
ordered to load the galleons according to the former decree of 1720.
The Manila merchants were in great excitement. The Governor, under
pretext that the original Royal Decree ought to have been transmitted
direct to the Philippines and not merely communicated by the Mexican
Viceroy, agreed to "obey and not fulfil" its conditions.
From the year 1720, during the period of prohibitions, the Royal
Treasury lost about P50,000 per annum, and many of the taxes were
not recovered in full. Besides this, the donations to Government by
the citizens, which sometimes had amounted to P40,000 in one year,
ceased. A double loss was also caused to Mexico, for the people there
had to pay much higher prices for their stuffs supplied by Spanish
(home) monopolists, whilst Mexican coffers were being drained to make
good the deficits in the Philippine Treasury. The Manila merchants
were terribly alarmed, and meeting after meeting was held. A Congress
of Government officials and priests was convened, and each priest
was asked to express his opinion on the state of trade.
Commercial depression in the Philippines had never been so marked,
and the position of affairs was made known to the King in a petition,
which elicited the Royal Decree dated April 8, 1734. It provided
that the value of exports should thenceforth not exceed P500,000,
and the amount permitted to return was also raised to P1,000,000
(always on the supposition that 100 per cent. over cost laid down
would be realized). The dues and taxes paid in Acapulco on arrival,
and the dues paid in Manila on starting, amounted to 17 per cent. of
the million expected to return. [116] This covered the whole cost
of maintenance of ships, salaries, freight, and charges of all kinds
which were paid by Government in the first instance, and then recovered
from the _Consulado_.
The fixed number of merchants was to be decided by the merchants
themselves without Government intervention. Licence was granted
to allow those of Cavite to be of the number, and both Spaniards
and natives were eligible. Military and other professional men,
except ecclesiastics, could thenceforth be of the number. Foreigners
were strictly excluded. The right to ship (_boleta_) was not to be
transferable, except to _poor widows_. A sworn invoice of the shipment
was to be sent to the royal officials and magistrate of the Supreme
Court of Mexico for the value to be verified. The official in charge,
or supercargo, was ordered to make a book containing a list of the
goods and their respective owners, and to hand this to the commander of
the fortress in Acapulco, with a copy of the same for the Viceroy. The
Viceroy was to send his copy to the Audit Office to be again copied,
and the last copy was to be forwarded to the Royal Indian Council.
Every soldier, sailor, and officer was at liberty to disembark with a
box containing goods of which the Philippine value should not exceed
P30, in addition to his private effects. All hidden goods were to be
confiscated, one-half to the Royal Treasury, one-fourth to the Judge
intervening, and one-fourth to the informer; but, if such confiscated
goods amounted to P50,000 in value, the Viceroy and Mexican Council
were to determine the sum to be awarded to the Judge and the informer.
If the shipment met a good market and realized more than 1,000,000
pesos, only 1,000,000 could be remitted in money, and the excess
in duty-paid Mexican merchandise. If the shipment failed to fetch
1,000,000, the difference could not be sent in money for making new
purchases. (The same restriction as in the decree of 1720.)
The object of these measures was to prevent Mexicans supplying
trading capital to the Philippines instead of purchasing Peninsula
manufactures. It was especially enacted that all goods sent to Mexico
from the Philippines should have been purchased with the capital
of the Philippine shippers, and be their exclusive property without
lien. If it were discovered that on the return journey of the galleon
merchandise was carried to the Philippines belonging to the Mexicans,
it was to be confiscated, and a fine imposed on the interested parties
of three times the value, payable to the Royal Treasury, on the first
conviction. The second conviction entailed confiscation of all the
culprits' goods and banishment from Mexico for 10 years.
The weights and measures of the goods shipped were to be Philippine,
and, above all, wax was to be sent in pieces of precisely the same
weight and size as by custom established.
The Council for freight allotment in Manila was to comprise the
Governor, the senior Magistrate, and, failing this latter, the
Minister of the Supreme Court next below him; also the Archbishop, or
in his stead the Dean of the Cathedral; an ordinary Judge, a Municipal
Councillor, and _one merchant_ as Commissioner in representation of
the eight who formed the _Consulado_ of merchants.
The expulsion of the non-christian Chinese in 1755 (_vide_
p. 111) caused a deficit in the taxes of P30,000 per annum. The
only exports of Philippine produce at this date were cacao, sugar,
wax, and sapanwood. Trade, and consequently the Treasury, were in a
deplorable state. To remedy matters, and to make up the above P30,000,
the Government proposed to levy an export duty which was to be applied
to the cost of armaments fitted out against pirates. Before the tax
was approved of by the King some friars loaded a vessel with export
merchandise, and absolutely refused to pay the impost, alleging
immunity. The Governor argued that there could be no religious
immunity in trade concerns. The friars appealed to Spain, and the
tax was disapproved of; meantime, most of the goods and the vessel
itself rotted pending the solution of the question by the Royal
Indian Council.
There have been three or four periods during which no galleon arrived
at the Philippines for two or three consecutive years, and coin became
very scarce, giving rise to rebellion on the part of the Chinese
and misery to the Filipinos. After the capture of the _Covadonga_ by
the British, six years elapsed before a galleon brought the subsidy;
then the _Rosario_ arrived with 5,000 gold ounces (nominally P80,000).
However, besides the subsidy, the Colony had certain other sources
of public revenue, as will be seen by the following:--
PHILIPPINE BUDGET FOR THE YEAR 1757
Income.
P cts.
Stamped Paper 12,199 87 1/2
Port and Anchorage Dues 25,938 00
Sale of Offices, such as Notaries, Public
Scribes, Secretaryships, etc. 5,839 12 1/2
Offices hired out 4,718 75
Taxes farmed out 28,500 00
Excise duties 4,195 00
Sale of _Encomiendas_, and 22 provincial
govts. hired out 263,588 00
Divers taxes, fines, pardons, etc. 18,156 00
Tribute, direct tax 4,477 00
Sudsidy from Mexico 250,000 00
Deficit 79,844 00
------- --
P 697,455 75
Expenditure.
P cts.
Supreme Court 34,219 75
Treasury and Audit Office 12,092 00
University 800 00
Cost of the annual Galleon 23,465 00
Clergy 103,751 00
Land and sea forces all over the Philippines
including offensive and defensive operations
against Moros--Staff and Material 312,864 00
Salaries, Hospital and Divers Expenses 70,158 00
Remittance in Merchandise to Mexico on account
of the Subsidy 140,106 00
------- --
P 697,455 75
When the merchant citizens of Manila were in clover, they made
donations to the Government to cover the deficits, and loans were
raised amongst them to defray extraordinary disbursements, such as
expeditions against the Mahometans, etc. In the good years, too, the
valuation of the merchandise shipped and the corresponding returns were
underrated in the sworn declarations, so that an immensely profitable
trade was done on a larger scale than was legally permitted. Between
1754 and 1759, in view of the reduced profits, due to the circumstances
already mentioned, the Manila merchants prayed the King for a reduction
of the royal dues, which had been originally fixed on the basis of
the gross returns being equal to double the cost of the merchandise
laid down in Acapulco. To meet the case, another Royal Decree was
issued confirming the fixed rate of royal dues and disbursements, but
in compensation the cargo was thenceforth permitted to include 4,000
pieces of fine linen, without restriction as to measure or value; the
sworn value was abolished, and the maximum return value of the whole
shipment was raised to one-and-a-half millions of pesos. Hence the
total dues and disbursements became equal to 11 1/3 per cent. instead
of 17 per cent., as heretofore, on the anticipated return value.
In 1763 the Subsidy, together with the _Consulado_ shippers' returns,
amounted in one voyage to two-and-a-half millions of pesos (_vide_
p. 88). After the independence of Mexico (1819), tribute in kind
(tobacco) was, until recently, shipped direct to Spain, and Peninsula
coin began to circulate in these Islands (_vide_ Currency).
Consequent on the banishment of the non-christian Chinese in 1755,
trade became stagnant. The Philippines now experienced what Spain had
felt since the reign of Phillip III., when the expulsion of 900,000
Moorish agriculturists and artisans crippled her home industries,
which needed a century and a half to revive. The Acapulco trade was
fast on the wane, and the Manila Spanish merchants were anxious to get
the local trade into their own hands. Every Chinese shop was closed
by Government order, and a joint-stock trading company of Spaniards
and half-breeds was formed with a capital of P76,500, in shares of
P500 each. Stores were opened in the business quarter, each under the
control of two Spaniards or half-breeds, the total number of shopmen
being 21. The object of the company was to purchase clothing and
staple goods of all kinds required in the Islands, and to sell the
same at 30 per cent. over cost price. Out of the 30 per cent. were to
be paid an 8 per cent. tax, a dividend of 10 per cent. per annum to
the shareholders, and the remainder was to cover salaries and form a
reserve fund for new investments. The company found it impossible to
make the same bargains with the Chinese sellers as the Chinese buyers
had done, and a large portion of the capital was soon lost. The
funds at that date in the _Obras Pias_ amounted to P159,000, and
the trustees were applied to by the company for financial support,
which they refused. The Governor was petitioned; theologians and
magistrates were consulted on the subject. The theological objections
were overruled by the judicial arguments, and the Governor ordered
that P130,000 of the _Obras Pias_ funds should be loaned to the
company on debentures; nevertheless, within a year the company failed.
A commercial company, known as the "_Compania Guipuzcoana de
Caracas_," was then created under royal sanction, and obtained
certain privileges. During the term of its existence, it almost
monopolized the Philippine-American trade, which was yet carried on
exclusively in the State galleons. On the expiration of its charter,
about the year 1783, a petition was presented to the Home Government,
praying for a renewal of monopolies and privileges in favour of a new
trading corporation, to be founded on a modified basis. Consequently,
a charter (_Real cedula_) was granted on March 10, 1785, to a company,
bearing the style and title of the "_Real Compania de Filipinas_." Its
capital was P8,000,000, in 32,000 shares of P250 each. King Charles
III. took up 4,000 shares; another 3,000 shares were reserved for the
friars and the Manila Spanish or native residents, and the balance
was allotted in the Peninsula.
The defunct company had engaged solely in the American trade, employing
the galleons; its successor left that sphere of commerce and proposed
to trade with the East and Europe.
[117] "To the '_Real Compania de Filipinas_' was conceded the
exclusive privilege of trade between Spain and the Archipelago,
with the exception of the traffic between Manila and Acapulco. Its
ships could fly the Royal Standard, with a signal to distinguish them
from war-vessels. It was allowed two years, counting from the date of
charter, to acquire foreign-built vessels and register them under the
Spanish flag, free of fees. It could import, duty free, any goods for
the fitting out of its ships, or ships' use. It could take into its
service royal naval officers, and, whilst these were so employed,
their seniority would continue to count, and in all respects they
would enjoy the same rights as if they were serving in the navy. It
could engage foreign sailors and officers, always provided that the
captain and chief officer were Spaniards. All existing Royal Decrees
and Orders, forbidding the importation into the Peninsula of stuffs
and manufactured articles from India, China, and Japan were abrogated
in favour of this company. Philippine produce, too, shipped to Spain
by the company, could enter duty free. The prohibition on direct
traffic with China and India was thenceforth abolished in favour of all
Manila merchants, and the company's ships in particular could call at
Chinese ports. The company undertook to support Philippine agriculture,
and to spend, with this object, 4 per cent, of its nett profits."
In order to protect the company's interests, foreign ships were not
allowed to bring goods from Europe to the Philippines, although they
could land Chinese and Indian wares.
By the Treaties of Tordesillas and Antwerp (q.v.), the Spaniards
had agreed that to reach their Oriental possessions they would
take only the Western route, which would be _via_ Mexico or round
Cape Horn. These treaties, however, were virtually quashed by
King Charles III. on the establishment of the "_Real Compania de
Filipinas_." Holland only lodged a nominal protest when the company's
ships were authorized to sail to the Philippines _via_ the Cape of
Good Hope, for the Spaniards' ability to compete had, meanwhile,
vastly diminished.
With such important immunities, and the credit which ought to have
been procurable by a company with P8,000,000 paid-up capital, its
operations might have been relatively vast. However, its balance
sheet, closed to October 31, 1790 (five-and-a-half years after it
started), shows the total nominal assets to be only P10,700,194,
largely in unrecoverable advances to tillers. The working account is
not set out. Although it was never, in itself, a flourishing concern,
it brought immense benefit to the Philippines (at the expense of its
shareholders) by opening the way for the Colony's future commercial
prosperity. This advantage operated in two ways. (1) It gave great
impulse to agriculture, which thenceforth began to make important
strides. By large sums of money, distributed in anticipation of the
4 per cent, on nett profit, and expended in the rural districts, it
imparted life, vigour and development to those germs of husbandry--such
as the cultivation of sugar-cane, tobacco, cotton, indigo, pepper,
etc.--which, for a long time had been, and to a certain extent are
still, the staple dependence of many provinces. (2) It opened the
road to final extinction of all those vexatious prohibitions of trade
with the Eastern ports and the Peninsula which had checked the energy
of the Manila merchants. It was the precursor of free trade--the
stepping-stone to commercial liberty in these regions.
The causes of its decline are not difficult to trace. Established as
it was on a semi-official basis, all kinds of intrigues were resorted
to--all manner of favouritism was besought--to secure appointments,
more or less lucrative, in the _Great Company_. Influential incapacity
prevailed over knowledge and ability, and the men intrusted with the
direction of the company's operations proved themselves inexperienced
and quite unfit to cope with unshackled competition from the outer
world. Their very exclusiveness was an irresistible temptation to
contrabandists. Manila private merchants, viewing with displeasure
monopoly in any form, lost no opportunity of putting obstacles in
the way of the company. Again, the willing concurrence of native
labourers in an enterprise of magnitude was as impossible to secure
then as it is now. The native had a high time at the expense of the
company, revelling in the enjoyment of cash advances, for which some
gave little, others nothing. Success could only have been achieved
by forced labour, and this right was not included in the charter.
In 1825 the company was on the point of collapse, when, to support
the tottering fabric, its capital was increased by P12,500,000 under
_Real Cedula_ of that year, dated June 22. King Charles IV. took
15,772 (P250) shares of this new issue. But nothing could save the
wreck, and finally it was decreed, by _Real Cedula_ of May 28, 1830,
that the privileges conceded to the "_Real Compania de Filipinas_"
had expired--and Manila was then opened to Free Trade with the whole
world. It marked an epoch in Philippine affairs.
In 1820 the declared independence of Mexico, acknowledged subsequently
by the European Powers, forced Spain to a decision, and direct trade
between the Philippines and the mother country became a reluctant
necessity. No restrictions were placed on the export to Spain of
colonial produce, but value limitations were fixed with regard to
Chinese goods. The export from the Philippines to Acapulco, Callao,
and other South American ports was limited to P750,000 at that date. In
the same year (1820) permission was granted for trade between Manila
and the Asiatic ports. Twenty-two years afterwards one-third of all
the Manila export trade was done with China.
When the galleons fell into disuse, communication was definitely
established with Spain by merchant sailing ships _via_ the Cape of
Good Hope, whilst the opening of the Suez Canal (1869) brought the
Philippines within 32 days' journey by steamer from Barcelona.
The voyage _via_ the Cape of Good Hope occupied from three to six
months; the sailings were less frequent than at the present day, and
the journey was invariably attended with innumerable discomforts. It
was interesting to hear the few old Spanish residents, in my time,
compare their privations when they came by the Cape with the luxurious
facilities of later times. What is to-day a pleasure was then a
hardship, consequently the number of Spaniards in the Islands was
small; their movements were always known. It was hardly possible for
a Spaniard to acquire a sum of money and migrate secretly from one
island to another, and still less easy was it for him to leave the
Colony clandestinely.
The Spaniard of that day who settled in the Colony usually became
well known during the period of the service which brought him to
the Far East. If, after his retirement from public duty, on the
conclusion of his tenure of office, he decided to remain in the
Colony, it was often due to his being able to count on the pecuniary
support and moral protection of the priests. The idea grew, so that
needy Spaniards in the Philippines, in the course of time, came
to entertain a kind of socialistic notion that those who had means
ought to aid and set up those who had nothing, without guarantee of
any kind: "_Si hubiera quien me proteja!_" was the common sigh--the
outcome of Caesarism nurtured by a Government which discountenanced
individual effort. Later on, too, many natives seemed to think that
the foreign firms, and others employing large capital, might well
become philanthropic institutions, paternally assisting them with
unsecured capital. The natives were bred in this moral bondage:
they had seen trading companies, established under royal sanction,
benefit the few and collapse; they had witnessed extensive works,
undertaken _por via de administracion_ miscarry in their ostensible
objects but prosper in their real intent, namely, the providing of
berths for those who lived by their wits.
The patriarchal system was essayed by a wealthy firm of American
merchants (Russell & Sturgis) with very disastrous results to
themselves. They distributed capital all over the Colony, and the
natives abused their support in a most abominable manner. A native,
alleging that he had opened up a plantation, would call on the firm
and procure advances against future crops after scant inquiry. Having
once advanced, it was necessary to continue doing so to save the
first loans.
Under the auspices of the late Mr. Nicholas Loney, great impulse was
given to the commerce of Yloilo, and, due to his efforts, the Island
of Negros was first opened up. His memory is still revered, and he is
often spoken of as the original benefactor to the trading community
of that district. Russell & Sturgis subsequently extended their
operations to that locality. The result was that they were deceived in
every direction by the natives, who, instead of bringing in produce
to pay off advances, sent their sons to college, built fine houses,
bought pianos, jewellery, etc., and in a hundred ways satisfied their
pride and love for outward show in a manner never known before, at
the expense of the American capitalists. As bankers, the firm enjoyed
the unlimited confidence of those classes who had something to lose as
well as to gain; hence it is said that, the original partners having
withdrawn their money interest, the firm endeavoured to continue
the business with a working capital chiefly derived from the funds
deposited by private persons at 8 per cent, per annum. All might
have gone well but for the rascality of the native agriculturists,
who brought about the failure of the house in 1875 by taking loans
and delivering no produce. The news amazed everybody. Trade was,
for the moment, completely paralyzed. The great firm, which for years
had been the mainspring of all Philippine mercantile enterprise, had
failed! But whilst many individuals suffered (principally depositors
at interest), fifty times as many families to-day owe their financial
position to the generosity of the big firm; and I could mention the
names of half a dozen real-estate owners in Yloilo Province who,
having started with nothing, somehow found themselves possessing
comparatively large fortunes at the time of the liquidation.
Consequent on the smash, a reaction set in which soon proved beneficial
to the Colony at large. Foreign and Spanish houses of minor importance,
which had laboured in the shade during the existence of the great
firm, were now able to extend their operations in branches of trade
which had hitherto been practically monopolized.
Before Manila was opened to foreign trade, even in a restricted form,
special concessions appear to have been granted to a few traders. One
writer mentions that a French mercantile house was founded in Manila
many years prior to 1787, and that an English firm obtained permission
to establish itself in 1809. In 1789 a foreign ship was allowed to
enter the port of Manila and to discharge a cargo. This would appear
to have been the first. In olden times the demand for ordinary foreign
commodities was supplied by the Chinese traders and a few Americans
and Persians. During the latter half of the 18th century a Spanish
man-of-war occasionally arrived, bringing European manufactures for
sale, and loaded a return cargo of Oriental goods.
The Philippine Islands were but little known in the foreign markets
and commercial centres of Europe before the middle of the 19th
century. Notwithstanding the special trading concessions granted to
one foreigner and another from the beginning of last century, it was
not until the port of Manila was unrestrictedly opened to resident
foreign merchants in 1834 that a regular export trade with the whole
mercantile world gradually came into existence.
It is said that whilst the charter of the "_Real Compania
de Filipinas_" was still in force (1785-1830) a Mr. Butler [118]
solicited permission to reside in and open up a trade between Manila
and foreign ports; but his petition was held to be monstrous and
grievously dangerous to the political security of the Colony; hence it
was rejected. The Spaniards had had very good reason to doubt foreign
intercourse after their experience of 1738, when they preferred a
war with England to a gross abuse of the _Asiento_ contract entered
into under the Treaty of Utrecht. [119] Subsequently the American firm
already mentioned, Russell & Sturgis, made a request to be allowed to
trade, which, having the support of the Gov.-General of the day, was
granted; and Mr. Butler, taking advantage of this recent precedent,
also succeeded in founding a commercial house in Manila. To these
foreigners is due the initiation of the traffic in those products
which became the staple trade of the Colony and paved the way for the
bulk of the business being, as it is to-day, in the hands of European
and American merchants.
The distrustful sentiment of olden times (justifiable in the 18th
century) pervaded the Spaniards' commercial and colonial policy up to
their last day. Proposed reforms and solicitations for permission
to introduce modern improvements were by no means welcomed. In
the provinces clerical opposition was often cast against liberal
innovations, and in the Government bureaux they were encompassed with
obstructive formalities, objections, and delays. [120]
By Royal Ordinance of 1844 strangers were excluded from the interior;
in 1857 unrepealed decrees were brought forward to urge the prohibition
of foreigners to establish themselves in the Colony; and, as late
as 1886, their trading here was declared to be "prejudicial to the
material interests of the country." [121]
The support of the friars referred to in p. 255 became a thing of
the past. Colonists had increased tenfold, the means of communication
and of exit were too ample for the security of the lenders, who, as
members of religious communities, could not seek redress at law, and,
moreover, those "lucky hits" which were made by penniless Europeans
in former times by pecuniary help "just in the nick of time" were
no longer possible, for every known channel of lucrative transaction
was in time taken up by capitalists.
It was the capital brought originally to the Philippines through
foreign channels which developed the modern commerce of the Colony,
and much of the present wealth of the inhabitants engaged in trade
and agriculture is indirectly due to foreign enterprise. Negros Island
was entirely opened up by foreign capital. In Manila, the fathers of
many of the half-castes and pure natives who at this day figure as
men of position and standing, commenced their careers as messengers,
warehouse-keepers, clerks, etc., of the foreign houses.
There were a great many well-to-do Spaniards in trade, but few whose
funds on starting were brought by them from the Peninsula. The first
Spanish steamer-owner in the Colony, a baker by trade, owed his
prosperity to the support of Russell & Sturgis. One of the richest
Spanish merchants (who died in 1894) once kept a little grocer's shop,
and after the failure of Russell & Sturgis he developed into a merchant
and shipowner whose firm became, in time, the largest Spanish house
operating in hemp and other produce.
About 14 Spanish firms of a certain importance were established in
Manila, Yloilo, and Cebu, in addition to the Europeans trading here
and there on the coasts of the Islands. In Manila there were (and
are still) two foreign bank branches [122] (one with a sub-branch in
Yloilo), three bank agencies, and the Philippine private banking-house
of J. M. Tuason & Co.; also the "Banco Espanol-Filipino," which was
instituted in 1852, with a capital of P400,000, in 2,000 shares of
P200 each. The capital was subsequently increased to P600.000. [123]
Authorized by charter, it issued notes payable to bearer on demand from
P10 upwards. The legal maximum limit of note issue was P1,200,000,
whilst the actual circulation was about P100,000 short of that
figure. This bank did a very limited amount of very secure business,
and it has paid dividends of 12 to 15 per cent.; hence the shares were
always at a premium. In 1888, when 12 per cent, dividend was paid,
this stock was quoted at P420; in 1895 it rose to P435. The _Obras
Pias_ funds (_vide_ p. 245) constituted the orginal capital of the
bank. The new position of this institution, under the (American)
Insular Government since 1905, is explained in Chapter xxxi.
The first Philippine bank was opened in Manila by a certain Francisco
Rodriguez about the year 1830.
From the conquest up to the year 1857 there was no Philippine
coinage. Mexican dollars were the only currency, and in default of
subsidiary money these dollars, called _pesos_, were cut. In 1764 cut
money was prohibited, and small Spanish silver and copper coins came
to the Islands. In 1799 the Gov.-General forbade the exportation of
money, and fixed the peso at 8 _reales fuertes_ and the _real_ at
17 _cuartos._ Shortly afterwards gold came to the Islands, and was
plentiful until 1882. In 1837 other copper coins came from Spain,
and the _real fuerte_ was fixed at 20 _cuartos_. In 1857 the Manila
mint was established, _pesetas_ were introduced, five being equal to
one peso, and 32 cuartos being equal to one peseta. Contemporaneously
the coinage in Spain was 34 cuartos to one peseta and 5 pesetas to
one _duro_--the coin nominally equivalent to the peso--but the duro
being subdivided into 20 _reales vellon_, the colonial real fuerte
came to be equivalent to 2 1/2 reales vellon. The evident intention
was to have one common nominal basis (peso and duro), but subdivided
in a manner to limit the currency of the colonial coinage to its own
locality. With pesos, reales, cuartos, maravedis, and ounces of gold,
bookkeeping was somewhat complicated; however, the Government accounts
were rendered easy by a decree dated January 17, 1857, which fixed
pesos and cents for official reckoning. Merchants then adopted this
standard. Up to 1860 gold was so abundant that as much as 10 per cent,
was paid to exchange an _onza_ of gold (P16) for silver. In 1878 gold
and silver were worth their nominal relative values. Gold, however,
has gradually disappeared from the Colony, large quantities having
been exported to China. In 1881 the current premium for purchasing
gold was 2 per cent., and at the beginning of 1885 as much as 10 per
cent. premium was paid for Philippine gold of the Isabella II or
any previous coinage. The gold currency of Alfonso XII. (1875-85)
was always of less intrinsic value than the coin of earlier date,
the difference averaging about 2 per cent. At the present day gold
could only be obtained in very limited quantities at about the same
rate as sight drafts on Europe. Philippine gold pieces are rare.
In 1883 Mexican dollars of a later coinage than 1877 were called
in, and a term was fixed after which they would cease to be legal
tender. In 1885 decimal bronze coins were introduced. In July, 1886,
a decree was published calling in all foreign and Chinese chop dollars
[124] within six months, after which date the introducer of such coin
into the Colony would be subject to the penalty of a fine equal to
20 per cent. of the value imported, the obligation to immediately
re-export the coin, and civil action for the misdemeanour. At the
expiration of the six months the Treasury was not in a position to
effect the conversion of the foreign medium in private hands prior
to the publication of the decree. The term was extended, but in time
the measure became practically void, so far as the legal tender was
concerned. However, the importation of Mexican dollars was still
prohibited; but, as they remained current in Manila at par value,
whilst in Hong-Kong and Singapore they could be bought for 8 to 12
per cent, (and in 1894 25 per cent.) less than Manila dollars, large
quantities were smuggled into the Colony. It is estimated that in the
year 1887 the clandestine introduction of Mexican dollars into Manila
averaged about P150,000 per month. I remember a Chinaman was caught in
September, 1887, with P164,000, imported in cases declared to contain
matches. In 1890 there was a "boom" in the silver market. Owing to
the action of the American Silverites, the Washington Treasury called
for a monthly supply of 4,000,000 of silver dollars; consequently
sight rate on London in Hong-Kong touched 3s. 10 1/4d., and in Manila
rose to 3s. 10 1/2d., but a rapid reaction set in when the Treasury
demand ceased. In 1895 we heard in Manila that the Government were
about to coin Philippine pesos and absolutely demonetize Mexicans
as a medium in the Islands. But this measure was never carried out,
probably because the Government had not the necessary cash with
which to effect the conversion. Some few Philippine peso pieces were,
however, put into circulation concurrently with the Mexican pesos.
In June, 1903, the ss. _Don Juan_, owned by Francisco L. Rojas, of
Manila, took on board in Hong-Kong about $400,000 Mexicans (i.e.,
pesos) for the purpose of smuggling them into Manila. On board there
were also, as passengers, a Senor Rodoreda and a crowd of Chinese
coolies. The vessel caught fire off the west coast of Luzon. The
captain, the crew, and the Spanish passenger abandoned the ship in
boats, leaving the Chinese to their awful fate. A steam launch was
sent alongside and saved a few dollars, whilst the despairing Chinese
became victims to the flames and sharks. The ship's burnt-out hull
was towed to Manila Bay. The remaining dollars were confiscated,
and the captain and chief engineer were prosecuted.
The universal monetary crisis due to the depreciation of silver was
experienced here, and the Government made matters still worse by
coining half-pesos and 20-cent pieces, which had not the intrinsic
value expressed, and exchange consequently fell still lower. In
September, 1887, a Madrid periodical, _Correo de Espana_, stated that
the bastard Philippine 50-cent pieces were rejected in Madrid even by
money-changers. In May, 1888, the peso was quoted at 3s.2 3/4d. (over
19 per cent. below nominal value), and shippers to the Colony, who
had already suffered considerably by the loss on exchange, had their
interests still further impaired by this action of the Treasury. For
Exchange Fluctuations _vide_ Chap, xxxi., "Trade Statistics."
A Custom-house was established and port opened in Zamboanga (Mindanao
Is.) for direct communication with abroad in 1831; those of Sual
(Pangasinan) and Yloilo (Panay Is.) in 1855, and that of Cebu in
1863. The Custom-house of Sual was subsequently abolished, and the
port having been closed to direct foreign trade, the place has lost
its former importance, and lapsed into the state of a lifeless village.
Special permission could be obtained for ships to load in and sail
direct from harbours where no Custom-houses were established, on a
sum of money being lodged beforehand at the _Caja de Depositos _in
Manila, to cover duties, dues, etc., to be assessed.
After the opening of the port of Yloilo, three years elapsed before a
cargo of produce sailed thence to a foreign port. Since then it has
gradually become the shipping centre for the crops (chiefly sugar
and sapanwood) raised in the islands of Panay and Negros. From
about the year 1882 to 1897 it attracted a portion of what was
formerly the Cebu trade. Since then the importance of Yloilo has
diminished. Its development as a port was entirely due to foreigners,
and considerably aided agriculture in the Visayas Islands. Heretofore
the small output of sugar (which had never reached 1,000 tons in
any year) had to be sent up to Manila. The expense of local freight,
brokerages, and double loading and discharging left so little profit
to the planters that the results were then quite discouraging. None
but wooden sugar-cane mills were employed at that time, but since
then many small steam-power factories have been erected (_vide_
Sugar). The produce shipped in Yloilo [125] was principally carried
to the United States in American sailing-ships.
For figures relating to Chief Exports from the various ports, _vide_
Chap. xxxi., "Trade Statistics."
Most of the carrying Import trade was in the hands of subsidized
Spanish steamer-owners, whilst the larger portion of the Exports was
conveyed in foreign vessels, which arrived in ballast from Eastern
ports where they had left cargoes.
Smuggling was carried on to a considerable extent for years, and in
1891 a fresh stimulus was given to contraband by the introduction of a
Protectionist Tariff, which came into force on April 1 of that year,
and under which Spanish goods brought in Spanish ships were allowed
to enter free of duty. [126]
In order to evade the payment of the Manila Port Works Tax (q.v.), for
which no value was given, large quantities of piece-goods for Manila
were shipped from Europe to Yloilo, passed through the Custom-house
there and re-shipped in inter-island steamers to Manila. In 1890 some
two-thirds of the Yloilo foreign imports were for re-shipment.
The circumstances which directly led to the opening of Zamboanga (in
1831) as a commercial port are interesting when it is remembered that
Mindanao Island is still quasi-independent in the interior--inhabited
by races unconquered by the Spaniards, and where agriculture by
civilized settlers is as yet nascent. It appears that the Port of Jolo
(Sulu Is.) had been, for a long time, frequented by foreign ships,
whose owners or officers (chiefly British) unscrupulously supplied the
Sulus with sundry manufactured goods, including _arms of warfare_,
much to the detriment of Spanish interests there, in exchange for
mother-of-pearl, pearls, gums, etc. The Spaniards claimed suzerain
rights over the island, but were not strong enough to establish and
protect a Custom-house, so they imposed the regulation that ships
loading in Jolo should put in at Zamboanga for clearance to foreign
ports. The foreigners who carried on this illicit traffic protested
against a sailing-ship being required to go out of her homeward
course about one hundred and twenty miles for the mere formality
of customs clearance. A British ship (and perhaps many before her)
sailed straight away from Jolo, in defiance of the Spaniards, and
the matter was then brought to the notice of the British Government,
who intimated that either Jolo must be declared a free port or a
Custom-house must be established there. The former alternative was
chosen by the Spaniards, but Zamboanga remained an open port for
foreign trade which very rarely came.
The supreme control of merchant shipping and naval forces was
vested in the same high official. No foreigner was permitted to own
a vessel trading between Spain and her colonies, or between one
Spanish colony and another, or doing a coasting trade within the
Colony. This difficulty was however readily overcome, and reduced to
a mere ineffective formality, by foreigners employing Spaniards to
become nominal owners of their vessels. Thus a very large portion of
the inter-island steamer carrying-trade was virtually conducted by
foreigners, chiefly British.
Mail-steamers, subsidized by the Government, left the capital every
fortnight for the different islands, and there was a quarterly Pacific
Mail Service to the Ladrone Islands. [127] Regular mails arrived from,
and left for, Europe every fortnight, but as there were intermediate
opportunities of remitting and receiving correspondence, really
about three mails were received and three despatched every month. The
mail-route for Europe is _via_ Singapore, but there were some seven
or eight sailings of steamers per month between Manila and Hong-Kong
(the nearest foreign colony--640 miles), whence mails were forwarded
to Europe, Australia, Japan, the United States, etc.
Between the capital and several ports in the adjacent provinces there
was a daily service of passenger and light cargo-steamers.
Between Yloilo and the adjoining Province of Antique, the District
of Concepcion and the Islands of Negros and Cebu, there were some
half-dozen small steamers, belonging to Filipinos and Spaniards,
running regularly with passengers and merchandise, whilst in the
sugar-producing season--from January to May--they were fully freighted
with cargoes of this staple article.
The carrying-trade in sailing craft between the Islands was chiefly
in the hands of natives and half-castes. There were also a few Spanish
sailing-ship owners, and in the Port of Yloilo a few schooners (called
_lorchas_), loading from 40 to 100 tons of sugar, were the property
of foreigners, under the nominal ownership of Spanish subjects,
for the reasons mentioned in the preceding page.
The principal exporters employ middlemen for the collecting of produce,
and usually require their guarantee for sales at credit to the
provincial purchasers of imports. These middlemen are always persons
of means, born in the Colony, and, understanding both the intricacies
of the native character and the European mode of transacting business,
they serve as very useful--almost indispensable--intermediaries.
It was only when the crisis in the Sugar trade affected the whole
world, and began to be felt in the Philippines in 1884, that the
majority of the natives engaged in that industry slowly began to
understand that the current price of produce fluctuated according
to supply and demand. Before transactions were so thoroughly in the
hands of middlemen, small producers used to take their samples to the
purchasers, "to see how much they cared to pay" as they expressed
it--the term "market price" seldom being used or understood in the
provinces, because of the belief that prices rose or fell according
to the caprice or generosity of the foreign buyer. Accustomed to
deal, during the first centuries of the Spanish occupation, with the
Chinese, the natives, even among themselves, rarely have fixed prices
in retail dealings, and nearly every quotation in small traffic is
taken only as a fancy price, subject to considerable rebate before
closing. The Chinese understand the native pretty well; they study his
likings, and they so fix their prices that an enormous reduction can
be made for his satisfaction. He goes away quite contented, whilst
the Chinaman chuckles over having got the best of the bargain. Even
the import houses, when they advertise their goods for sale, seldom
state the prices; it seems as if all regarded the question of price
as a shifty one.
The system of giving credit in the retail trade of Manila, and a few
provincial towns, was the ruin of many shopkeepers. There were few
retailers who had fixed prices; most of them fluctuated according to
the race, or nationality, of the intending customer. The Chinese dealer
made no secret about his price being merely nominal. If on the first
offer the hesitating purchaser were about to move away, he would call
after him and politely invite him to haggle over the bargain. [128]
The only real basis of wealth in the Colony is the raw material
obtained by Agriculture, and Forest produce. Nothing was done by the
conquerors to foster the Industrial Arts, and the Manufacturing Trades
were of insignificant importance. Cigars were the only _manufactured_
export staple, whilst perfumes, a little cordage, and occasionally
a parcel of straw or finely-split bamboo hats were shipped.
In the Provinces of Bulacan and Pampanga, split-cane and Nito
(_lygodium_) hats, straw mats, and cigar-cases are made. Some of
the finest worked cigar-cases require so much time for making that
they cost up to P20 each. Hats can only be obtained in quantities by
shippers through native middlemen.
In Yloilo Province a rough cloth called _Sinamay_ is woven [129]
from selected hemp fibre. Also in this province and that of Antique
(Panay Is.), _Pina_ muslin of pure pine-leaf fibre and _Husi_ of mixed
pine-leaf and hemp filament are made. Ilocos Province has a reputation
in these Islands for its woollen and dyed cotton fabrics. Taal
(Batangas) also produces a special make of cotton stuffs. Pasig,
on the river of that name, and Sulipan (Pampanga), are locally known
for their rough pottery, and Capiz and Romblon for their sugar-bags.
Paete, at the extreme east of the Laguna de Bay, is the centre for
white-wood furniture and wood-carving. In Mariquina, near Manila,
wooden clogs and native leather shoes are made. Santa Cruz (Manila)
is the gold and silver-workers' quarter. The native women in nearly
all the civilized provinces produce some very handsome specimens of
embroidery on European patterns. Mats to sleep upon (_petates_) straw
bags (_bayones_), baskets (_tampipes_), alcohol, bamboo furniture,
buffalo-hide leather, wax candles, soap, etc., have their centres of
manufacture on a small scale. The first Philippine brewery was opened
October 4, 1890, in San Miguel (Manila) by Don Enrique Barretto,
to whom was granted a monopoly by the Spanish Government for twenty
years. It is now chiefly owned by a Philippine half-caste, Don Pedro
P. Rojas (resident in Paris), who formed it into a company which has
become a very flourishing concern. Philippine capital alone supports
these manufactures. The traffic and consumption being entirely local,
the consequent increase of wealth to the Colony is the economized
difference between them and imported articles. These industries bring
no fresh capital to the Colony, by way of profits, but they contribute
to check its egress by the returns of agriculture changing hands to
the local manufacturer instead of to the foreign merchant.
Want of cheap means of land-transport has, so far, been the chief
drawback to Philippine manufactures, which are of small importance
in the total trade of the Colony.
Philippine railways were first officially projected in 1875,
when a Royal Decree of that year, dated August 6, determined the
legislative basis for works of that nature. The Inspector of Public
Works was instructed to form a general plan of a railway system
in Luzon Island. The projected system included (1) a line running
north from Manila through the Provinces of Bulacan, Pampanga, and
Pangasinan. (2) A line running south from Manila, along the Laguna
de Bay shore and eastwards through Tayabas, Camarines, and Albay
Provinces. (3) A branch from this line on the Laguna de Bay shore to
run almost due south to Batangas. The lines to be constructed were
classed under two heads, viz.:--(1) Those of general public utility
to be laid down either by the State or by subsidized companies, the
concession in this case being given by the Home Government; and (2)
those of private interest, for the construction of which concessions
could be granted by the Gov.-General.
In 1885 the Government solicited tenders for the laying of the
first line of railway from Manila to Dagupan--a port on the Gulf
of Lingayen, and the only practicable outlet for produce from the
Province of Pangasinan and Tarlac District. The distance by sea
is 216 miles--the railway line 196 kilometres (say 120 miles). The
subsidy offered by the Government amounted to about P7,650 per mile,
but on three occasions no tender was forthcoming either from Madrid
or in Manila, where it was simultaneously solicited. Subsequently
a modified offer was made of a guaranteed annual interest of 8 per
cent, on a maximum outlay of P4,964,473.65, and the news was received
in Manila in October, 1886, that the contract had been taken up by
a London firm of contractors. The prospectus of "The Manila Railway
Co., Ltd," was issued in February, 1888. The line was to be completed
within four years from July 21, 1887, and at the end of ninety-nine
years the railway and rolling-stock were to revert to the Spanish
Government without compensation. The rails, locomotives (36 tons and
12 tons each), tenders, coaches, waggons, and ironwork for bridges all
came from England. The first stone of the Central Station in Manila
(Bilibid Road, Tondo) was laid by Gov.-General Emilio Terrero on July
31, 1887. In 1890 the original contractors failed, and only the first
section of 28 miles was opened to traffic on March 24, 1891.
Many other circumstances, however, contributed to delay the opening
of the whole line. Compensation claims were very slowly agreed to;
the Government engineers slightly altered the plans; the company's
engineers could not find a hard strata in the bed of the Calumpit
River [130] (a branch of the Rio Grande de Pampanga) on which to
build the piers of the bridge; and lastly the Spanish authorities,
who had direct intervention in the work, found all sorts of excuses
for postponing the opening of the line. When the Civil Director was
applied to, he calmly replied that he was going to the baths, and
would think about it. Finally, on appeal to the highest authority,
Gov.-General Despujols himself went up to Tarlac, and in an energetic
speech, reflecting on the dilatoriness of his subordinates, he declared
the first Philippine railway open to traffic on November 23, 1892. For
about a year and a half passengers and goods were ferried across the
Calumpit River in pontoons. Large caissons had to be sunk in the river
in which to build the piers for the iron bridge, which cost an enormous
sum of money in excess of the estimate. Later on heavy rains caused
a partial inundation of the line, the embankment of which yielded to
the accumulated mass of water, and traffic to Dagupan was temporarily
suspended. The total outlay on the line far exceeded the company's
original calculation, and to avert a financial collapse fresh capital
had to be raised by the issue of 6 per cent. Prior Lien Mortgage Bonds,
ranking before the debenture stock. The following official quotations
on the London Stock Exchange will show the public appreciation of
the Manila Railway Company's shares and bonds:--
OFFICIAL QUOTATIONS.
December.
| 7% Cum. Pref. L10 Shares.
| | 6% Deb. L100 Stock.
| | | 6% Prior Lien Mort. Bonds,
| | | Series A., L100.
| | | | 6% Prior Lien Mort. Bonds,
| | | | Series B., L100.
L L L L
1893 2 49 98 87
1894 1 32 104 91
1895 1/2 29 107 85
1896 1/4 22 96 64
1897 1/4 19 101 75
1898 1 3/4 45 110 98
1899 1 3/4 33 1/2 101 1/2 87 1/2
1900 1 1/2 42 103 1/2 97
1901 2 55 108 102
1902 1 1/2 52 109 102
1903 1 1/2 58 108 104
1904 3 1/2 83 110 107
1905 4 3/4 117 110 106
Up to July 1, 1905, the interest has been regularly paid on the
Prior Lien Bonds. No interest has been paid on the debentures (up to
December, 1905) since July 1, 1891, nor on the 7 per cent. Cumulative
Preference Shares since July 1, 1890. On January 26, 1895, these
shares were officially quoted, for sellers, 0.
Including the termini in Manila (Tondo) and Dagupan, there are 29
stations and 16 bridges along the main line, over which the journey
occupies eight hours. There are two branch lines, viz.:--from Bigaa
to Cabanatuan (Nueva Ecija), and from Angeles (Pampanga) to Camp
Stotsenberg. From the Manila terminus there is a short line (about a
mile) running down to the quay in Binondo for goods traffic only. The
country through which this line passes is flat, and has large natural
resources, the development of which--without a railway--had not been
feasible owing to the ranges of mountains--chiefly the Cordillera of
Zambales--which run parallel to the coast.
The railway is ably managed, but when I travelled on it in 1904 much
of the rolling-stock needed renewal.
In 1890, under Royal Order No. 508, dated June 11 of that year, a 99
years' concession was granted to a British commercial firm in Manila
to lay a 21-mile line of railway, without subsidy, from Manila to
Antipolo, to be called the "Centre of Luzon Railway." The work was to
be commenced within one year and finished within two years. The basis
of the anticipated traffic was the conveyance of pilgrims to the Shrine
of Our Lady of Good Voyage and Peace (_vide_ p. 184); but, moreover,
the proposed line connected the parishes of Dilao (then 4,380 pop.),
Santa Ana (then 2,115 pop.), Mariquina (then 10,000 pop.), Cainta
(then 2,300 pop.), and Taytay (then 6,500 pop.)--branching to Pasig
and Angono--with Antipolo (then 3,800; now 2,800 pop.). The estimated
outlay was about P1,000,000, but the concession was abandoned. The
project has since been revived under American auspices.
Under Spanish government there was a land Telegraph Service from Manila
to all civilized parts of Luzon Island--also in Panay Island from Capiz
to Yloilo, and in Cebu Island from the city of Cebu across the Island
and up the west coast as far north as Tuburan. There was a land-line
from Manila to Bolinao (Zambales), from which point a submarine cable
was laid in April, 1880, by the Eastern Extension Australasia and
China Telegraph Company, Ltd., whereby Manila was placed in direct
telegraphic communication with the rest of the world. For this
service the Spanish Government paid the company P4,000 a month for
a period of 10 years, which expired in June, 1890. In April, 1898,
the same company detached the cable from Bolinao and carried it on
to Manila in the s.s. _Sherard Osborn_, 207 nautical miles having
been added to the cable for the purpose. In return for this service
the Spanish Government gave the company certain exclusive rights and
valuable concessions. In May, 1898, the American Admiral Dewey ordered
the Manila-Hong-Kong cable to be cut, but the connection was made
good again after the Preliminaries of Peace with Spain were signed
(August 12, 1898). Cable communication was suspended, therefore,
from May 2 until August 21 of that year.
In 1897 another submarine cable was laid by the above company,
under contract with the Spanish Government, connecting Manila with
the Southern Islands of Panay and Cebu (Tuburan). The Manila-Panay
cable was also cut by order of Admiral Dewey (May 23, 1898), but after
August 12, under an arrangement made between the American and Spanish
Governments, it was re-opened on a neutral basis, and the company's
own staff worked it direct with the Manila public, instead of through
the medium of Spanish officials.
Since the American occupation a new cable connecting the Islands
with the United States has been laid (opened July 4, 1903), whilst a
network of submarine and land-wires has been established throughout
the Archipelago.
Owing to their geographical position, none of the Philippine ports
are on the line of the regular mail and passenger steamers _en route_
elsewhere; hence, unlike Hong-Kong, Singapore, and other Eastern ports,
there is little profit to be derived from a cosmopolitan floating
population. Due, probably, to the tedious Customs regulations--the
obligation of every person to procure, and carry on his person, a
document of identification--the requirement of a passport to enter
the Islands, and complicated formalities to recover it on leaving--the
absence of railroads and hotels in the interior and the difficulties of
travelling--this Colony, during the Spanish _regime_, was apparently
outside the region of tourists and "globe-trotters." Indeed the
Philippine Archipelago formed an isolated settlement in the Far East
which traders or pleasure-seekers rarely visited _en passant_ to
explore and reveal to the world its natural wealth and beauty. It was
a Colony comparatively so little known that, forty years ago, fairly
educated people in England used to refer to it as "The Manillas,"
whilst up to the end of Spanish rule old residents, on visiting
Singapore and Hong-Kong, were often highly amused by the extravagant
notions which prevailed, even there, concerning the Philippines. But
the regulations above referred to were an advantage to the respectable
resident, for they had the desirable effect of excluding many of those
nondescript wanderers and social outcasts who invade other colonies.
Since the Revolution there has been a large influx of American tourists
to the Islands, arriving in the army-transports, passage free, to see
"the new possession," as the Archipelago is popularly called in the
United States.