The Royal Company.
The closing of the Chinese shops in Manila and the expulsion of the
Chinese merchants was the beginning of a new state of things in the
islands. A joint-stock company was formed to buy clothing and staple
goods for the Philippines, and sell at 30 per cent. advance. But the
Spaniards lacked the keenness at bargaining that their predecessors
possessed, and the company soon failed. Another company followed, under
the favor of the King of Spain, who took a large block of its shares
and gave it abundant privileges and monopolies. It--the Royal Company
of the Philippines, fully organized in 1785--was given exclusive
rights of trade, aside from the galleon trade with Acapulco. Foreign
ships were not allowed to bring goods from Europe to the Philippines,
though they could land Chinese and Indian goods.
There were old treaties that prohibited Spain from seeking the Pacific
by the eastern route, her trade being via Cape Horn and Mexico. Charles
III. quashed these treaties in favor of the Royal Company, whose
ships were allowed to sail by way of the Cape of Good Hope. No one
seriously objected--Spanish commerce was not worth an objection. With
its large capital and its privileges the Royal Company should have
flourished. But it never did. Yet it benefited the Philippines, and
gave a great impulse to agriculture, on which large sums of money were
expended. The culture of sugar, tobacco, cotton, indigo, and pepper was
much developed, and these long remained the staples of many provinces.
The company had splendid opportunities, but failed to make the most of
them. It broke down the vexatious prohibition to trade with the East
and with Spain, which had checked Philippine enterprise, but the dry
rot of Spanish incapacity caused its decay. Influence and intrigue
brought men into the company that lacked ability, but received large
salaries. As a result, it lost the power to compete with experts,
while the contraband trade ate into its profits, and the merchants
of Manila opposed its monopolies. Finally, in 1830, its privileges
were taken away, and the island-colony was opened to the trade of
the world. Five years afterward the Company ceased to exist.
The Restrictions Are Gradually Abolished.
Early in the nineteenth century foreigners made their way past
the bars of restriction. A Mr. Butler first asked the privilege
of residing in Manila, and opening up trade with Europe; but his
humble petition was rejected as something monstrous,--an innovation
that would put an end to the political security of the colony. Yet
the needs of commerce forced Spain out of this illiberal attitude,
and an American firm, Russell and Sturgis, was soon after admitted
by favor of the Governor-General. Then Mr. Butler came back. Many
others have since followed, and there are, to-day, about a dozen
British and as many German and Swiss firms in the ports of Manila,
Iloilo, and Cebú, together with firms of other nations.
The house of Russell & Sturgis was long prominent in Philippine
trade. It opened up the sugar culture in the isle of Negros, invested
a large amount of money in agriculture, and was long the mainspring
of Philippine enterprise. But it was, in the end, victimized by the
natives, to whom its capital had been largely advanced, and in 1875,
to the amazement and consternation of the people, the great firm
failed. For a time its failure paralyzed trade, but the minor firms it
had overshadowed soon expanded, and business grew brisker than before.
Vexatious Duties on Foreign Imports.
But while foreign merchants were thus forcing their way into the
Philippines, they had to contend against the peculiar Spanish ideas
of commercial enterprise. The customs duties--at that time seven
per cent. on goods in Spanish ships--were double that in foreign
vessels. And the most vexatious regulations prevailed. Thus there
was a system of levying tonnage-dues on foreign vessels in addition
to duties, a cargo-ship being charged double the dues of one in
ballast. If a ship in ballast should land the smallest parcel, it was
at once charged the higher rate. And it is said that the officials
sometimes bribed a sailor to carry a small bundle on shore, to give
them a pretext to make the higher charge. The story is told, that,
one shipmaster, who had brought a cargo of cobble-stones to Manila,
was severely fined because his cargo proved to be one stone short of
the number on his manifest.
In 1896 the collector of customs at Manila made $82,000 in this way,
all of which went into his private purse. By exactions like these
the Spanish officials managed to make their positions profitable,
but they drove away trade, foreign shippers avoiding Manila.
Duties Made Uniform.
In 1869 a Royal decree was passed, making all decrees uniform,
abolishing export duties, and doing away with the obnoxious
port-charges. Since then foreign trade has been less hampered by
Spanish privilege.
To-day subsidized Spanish steamers have most of the import trade,
though the export trade is done mainly by foreign vessels. These carry
cargoes to Asiatic ports, discharge them, and proceed in ballast to
the islands. No foreigner is permitted to own a vessel trading between
Spain and any of her colonies, or between one colony and another, or
doing a coast-trade from island to island. But this law is readily
evaded, by foreigners giving to Spaniards the nominal ownership of
their vessels. In this way a large part of the internal trade of the
Philippines has fallen into foreign hands.
Spanish Opposition to Foreign Trade.
Despite the fact that foreign trade has forced its way into the
Philippines, every step has been gained against Spanish distrust and
opposition. Spain is not a mercantile nation, and its commercial
ideas are centuries behind the age. Only constant pressure forced
the Philippine authorities into more liberal measures, yet the
island-trade remained deplorably fettered, as compared with
general commerce. Proposed reforms, demands to introduce modern
improvements, were alike unwelcome, the Church especially resisting
innovation. Useless and obstructive formalities stood in the way of
trade; vexatious delays were made; and the development of the colony
seems to have been the last thought in the Governor-General's mind.
By a Royal decree, in 1844, strangers were excluded from the interior
of the islands. In 1857 old decrees were used to prevent foreign
establishments in the colony. In 1886 foreign trade was declared
prejudicial to the "material interests of the country."
Trade with the Natives.
The conservatism and ignorance of the natives have similarly
stood in the way of commercial progress. They could not be made to
understand that the change in quotations was not due to the caprice
of buyers. Many of them lost by withholding goods when the quotations
did not please them. Only in 1884, when the whole world was affected
by the crisis in the sugar trade, could they be made to perceive that
quotations were quite beyond the control of the merchants.
Accustomed to deal with the Chinese, the natives have no fixed prices
for their products. The Chinese understand them, and put prices on
their goods that will allow for a large reduction. In the end, the
native goes away contented, though the shrewd Chinaman has usually
the best of the bargain. Even important mercantile houses seldom
state prices, business being conducted on the shifting Asiatic
scale. Foreign capitalists distrust trade with the natives, whose
word usually cannot be depended upon, and employ middlemen to collect
produce. These are persons born in the colony, who understand at once
the business methods of the foreigner and the shifty customs of the
natives. And they generally bring the opposite parties to terms.
The only real basis of wealth in the Philippines is the raw material
of agriculture and the forest. Nothing has been done to foster the
industrial arts, and the manufactures are insignificant, the cigar
product being the principal one.
The Decline of American Trade.
From the opening of the large export trade until recently, Americans
were supreme. But the failure of the great house of Russell & Sturgis
made a change. Other traders rose upon their ruins, and of late years
England has gained the bulk of the trade. The downfall of the Americans
was completed after the outbreak of the Cuban troubles in 1895. The
Spanish hatred of the Yankee was reflected in these far-off islands,
and, by petty annoyances that soon became intolerable, the last
American firms were crowded out.
Recent Measures and Statistics.
In 1891 a protective tariff was laid by Spain on the trade of the
Philippines. This diverted to the home-country most of the traffic
formerly enjoyed by England and other countries. Iron goods and
hardware are now furnished principally by Germany and Switzerland,
but the Manchester cotton goods are supplemented by similar fabrics
made in Barcelona. The imports from the United States are chiefly
kerosene oil and flour.
As an indication of the growth of Philippine trade since the intrusion
of foreign shippers put an end to the mediæval obstructions of Spain,
some figures may be quoted:
In 1841 the imports of the islands aggregated in value $3,230,000, the
exports, $4,370,000. In 1885 the imports had increased to $19,171,468;
the exports to $24,553,686. In 1893 the imports aggregated $25,500,000;
the exports $30,000,000. These figures are estimated, however, in
Mexican dollars, the currency of the islands, which is at a large
discount elsewhere.
In 1895 the principal exports of the Philippines were: Hemp,
$14,517,000; sugar, $10,975,000; tobacco, $3,159,000; cocoanuts,
$356,000. This fell off greatly in 1896, on account of the increased
scale of export duties, hemp declining to $7,500,000, and sugar
to $10,975,000.
On August 21, 1897, a decree went into effect that imposed an
extraordinary customs duty of 6 per cent. ad valorem on all merchandise
imports, without regard to the country whence they came.
The trade of the United States with the Philippines has been steadily
on the decline within recent years. In 1888 their imports from
the islands were valued at $10,268,278; in 1897, at $4,383,760. The
export trade has always been insignificant, as compared with European
countries. In 1889 it aggregated $165,903; in 1897 it was only
$94,567. During the same period the exports of Spain to the islands
increased from $890,000 to $7,972,583. These were principally cotton
fabrics. The exports from the United States embraced mineral oil,
bread stuffs, cotton goods, chemicals, iron and steel goods. Of the
imports, the most important were Manila hemp and sugar; other imports
include cigars, tobacco, woods, hides, shells, indigo, and coffee.
Bad Result of Spanish Rule.
The foreign trade of the Philippines has always been subject to great
fluctuations, owing to insecurity under the Spanish administration,
the dissatisfaction of the native population, and to the frequent
insurrections. These influences have stood seriously in the way of
developing the wealth of the islands. Under a new and progressive
administration, there seems nothing to hinder this fertile region
from becoming one of the garden spots of the earth.
The possession of the Philippines, on the other hand, has not been
a bonanza for Spain. The expenses cut so deeply into the revenues
that only a few hundred thousand dollars were left yearly for the
Crown. The bulk of the proceeds fell into the hands of the clergy and
the hidalgos sent out to rob and misgovern the islands. In addition
to the revenue to the King, a few Spanish noblemen receive pensions
from the islands. Among them are the Duke of Veragua and the Marquis
of Barboles, both descendants of Columbus, and, as such, entitled to
the consideration of the United States.
The Spanish receipts were obtained from everything that could be
taxed. In truth, the people were crowded wherever possible, and kept
in a state of chronic irritation. This made them ready at any time
to break into rebellion.
As regards the expenditure of money raised by taxes and duties, while
little came to the King, little also was spent on the islands. It was
estimated that in 1897 $611,145 were expended on public works. If so,
the result was not visible in the Philippines. If a bridge was needed,
the neighboring nations had to raise the money to build it. More money
was set aside for the transportation of priests than for the building
of railroads, while ten times the sum was donated to the support
of the Manila Cathedral than was spent for new improvements and for
public instruction. Regarding the officials, from the Governor-General
down to the lowest underling, they seem to have devoted themselves
industriously to robbing the people with one hand and the Government
with the other, sowing a crop of hatred of the Spaniard and of Spanish
rule, which had its harvest in the fierce insurrection of 1896-98.