Towards the close of the eighteenth century there were events which
indicated the coming of greater liberty. Direct communication was
established in 1765 between Manila and Spain by means of a warship
which was to sail annually from Cadiz, with European goods, and to
come back loaded, not only with the products of the Philippines,
but also with Oriental merchandise, including goods from China and
Japan. However, the innovation was not well received in Manila, due
perhaps to the monopolistic habit of the merchants, and, in 1783,
these annual voyages were discontinued. [132]
The coming of Governor José de Basco y Vargas marked a new era in the
economic history of the country, for two important events happened
during his term: the establishment of the Sociedad Económica de
Amigos del Pais, in 1781, and of the Real Compañía de Filipinas,
in 1785. These may be considered to be the most serious attempts
of Spain throughout her rule, to develop the natural resources of
the Philippines.
The Sociedad Económica de Amigos del País.
Basco's idea was to make the Philippines economically self-sufficing,
and not dependent on Mexico. For this reason, he encouraged the
development of agriculture by offering prizes to those who would
excel in the cultivation of cotton, spices, sugar and silk; those who
would open up the various kinds of mines; those who invented useful
things, and those who excelled in the arts and sciences. Likewise, he
issued circulars and pamphlets explaining the method of cultivating
the different Philippine crops. In order to get the community's
co-operation in carrying out his economic plan, he induced the King
to issue a decree establishing the Economic Society. In spite of
serious opposition on the part of many, the society was auspiciously
inaugurated in 1782. It seemed, however, as if Basco's ideas were
too advanced for his time, for the society led a declining life up
to 1822. A memoir published by the Society [133], and containing
a list of its achievements, shows its activity to have consisted of
discussions of economic subjects; the publication of pamphlets dealing
with the cultivation of coffee, sugar, indigo, silk, gutta-percha,
hemp, cacao, and other plants; the offering of prizes to persons who
succeeded in weaving cloths, making dyes, inventing hemp-stripping
machines, and contributing other useful things to agriculture;
and the introduction of agricultural implements of various kinds
from the United States. The Society lived for over a century, till
1890. Another means resorted to by Basco to free the Philippines from
its dependence on Mexico was the establishment of the tobacco monopoly
by the government. This proved to be a good source of revenue, and,
at the same time, was instrumental in bringing into cultivation
large tracts of land. However, the evils attending it were many;
the abuses of the government officials in enforcing the regulations,
and in trying to make profits for themselves; the lack of incentive
on the part of the producer to improve the quality of his tobacco;
the existence of smuggling and bribery, and the poverty of the farmer;
all these were attributed to the tobacco monopoly. [134]
The Royal Company.
The second important event during Basco's rule was the establishment
of the "Real Compañía de Filipinas" by royal decrece of March 10,
1785. The capital of the company was fixed at eight million pesos
divided into 32,000 shares of two hundred and fifty pesos each;
the king bought four thousand shares, and the citizens of Manila
were allowed three thousand. The chief object of the company was
to establish commercial relations among the different colonies,
and also between the colonies and Spain; to supply Manila with the
products of Europe, and, in return, to carry to Spain not only the
products of the Philippines, but also the merchandise coming from the
Oriental countries. The second important object was the encouragement
of Philippine agriculture, as shown in section four of the charter,
which required the company to invest four per cent. of its net profits
in some extractive industries, chiefly agriculture. In order to help
the company, all the laws and decrees which prohibited the importation
of Oriental cloths into Spain, were repealed, and the products of the
Philippines were exempted from all kinds of duties both in Manila and
in Spain. Furthermore, the merchants of Manila were allowed to go
to the Asiatic ports for trade, and the Chinese who came to Manila
were allowed to trade freely without subjecting themselves to any
restrictions. However, the old Manila-Acapulco trade was not to be
disturbed, for the company could not send ships to Acapulco.
The company encouraged the production of silk, [135] indigo,
[136] sugar, [137] cotton, [138] and especially of pepper and other
spices. For this purpose it bought lands, established posts in Ilocos,
Bataan, Cavite, and Camarines, and offered prizes. It also gave
stimulus to manufacturing by establishing textile factories.
In spite of the special protection and privileges granted to the
company, it declined from year to year. In 1805 it was rechartered,
and given fifteen years of life and the same privileges as before;
its capital was fixed at twelve and a half million pesos divided
into shares of two hundred and fifty pesos each; foreigners were
allowed to own shares; and the ships were allowed to sail directly
from the Asiatic ports without stopping at Manila; and finally the
three-year privilege, [139] allowed to foreigners at the request
of the company in 1789, of importing into Manila Asiatic goods, and
exporting the products of the country, was made perpetual. In 1830
its privileges were revoked, and Manila was left open to foreign
commerce and navigation.
What were the causes that led to the ill success of the Royal
Company? Among the minor causes mentioned was the indifference
of the residents of the Philippines; for, as Zuñiga says, [140]
"taught to gain in New Spain what is necessary for their comfort,
without any more work than sending a memorial once every year, it is
hard for them to engage in a commerce which is servile and vexatious;
and, accustomed to exorbitant profits, they cannot adapt themselves
to the gradual profits in a store; * * *. Furthermore, the company
neglected to import the goods from Europe, such as wines and groceries,
which the foreign ships brought at great profit."
It also failed to establish direct trade relations with China and
India, but depended solely on buying the goods which were brought
there by the Chinese and other foreign traders; hence, it had to pay
higher prices for the Oriental goods it sent to Europe. The company,
too, overestimated the importance of certain Philippine products,
especially spices, which were produced much more cheaply in Sumatra and
Java. Though allowed to invest only four per cent of its net profits in
agriculture during the first years of its existence, it invested great
sums in buying lands, made advances to the producers; in other words,
it engaged in much speculation, which proved disastrous. It also gave
premature attention to the development of manufacturing. The chief
cause, however, of the failure of the company was the fact that it
was not given control of the Manila-Acapulco trade, which continued
to absorb the attention of the very men, who, because of experience
in the country, would have helped the Company during its formative
years. [141]
According to Dr. Tavera, the Royal Company introduced capital, which
was essential for economic development. [142]
The opening of the ports.
Even before the coming of Basco, the taking of Manila by the English
in 1762 had a good economic effect, for it acquainted England with
the natural resources of the Philippines, and the possibilities for
material development. [143] Perhaps as a result of the information
thus gained, we find an English commercial house obtaining permission
to establish itself in Manila in 1809. And in 1814, probably due to
the liberalizing influence of the war of independence just closed in
Spain, it was stipulated that all colonial ports still restricted
should be opened to foreign traffic, and that foreigners should be
allowed to enter, and engage in commercial activities; thus was swept
away the restrictive colonial policy, which had prevailed among the
European nations, and which Spain was the very last to abandon. In the
beginning, however, there was need of special royal permission for each
foreign house established. Later on the permission of the Governor
General only sufficed. [144] An earlier edict of the Philippine
government, repeated in 1828 and again in 1840, forbade foreigners to
sell at retail or to enter the provinces to carry on business of any
kind. [145] In 1842 there were in Manila thirty-nine Spanish shipping
and commercial houses, and about a dozen foreign houses, of which seven
or eight were English, two were Americans, one was French, and another
Danish, while consuls of France, the United States, Denmark, Sweden,
and Belgium resided there. [146] By about 1859, according to Bowring,
there were in Manila seven English, three American, two French, two
Swiss, and one German commercial establishments; and in the other
ports, there was no European business house, except one in Iloilo,
where there was an English firm of which the British vice-consul was
the directing partner. [147]
Once Manila was opened, the advocates of greater freedom did not rest
content with only one free port, because there were great difficulties
in connection with the exportation of products from the places far
from Manila. The products of the Ilocano provinces, southern Luzon,
and the Visayas, and even Mindanao, had all to be taken to Manila,
and from there, exported. Thus, the system entailed unnecessary risks,
waste of time, and extra expense. [148] Accordingly, at the request
of the government of the Philippines, Royal Order of September 29,
1855, approved the opening of the ports of Sual (Pangasinan), Iloilo,
and Zamboanga. And lastly, by Royal Decree of July 30, 1860, Cebu,
which up to that time was obliged to send her products for exportation
either to Manila or Iloilo, was opened.
Effects of the opening of the ports.
Taking the increase of exports as an indication of greater agricultural
and commercial activity, we find that, with the opening of the ports,
exports increased; and these now consisted of the products of the
country, instead of manufactured goods brought from elsewhere in the
Orient. [149] By 1839, the Philippines exported 2,674,220 pesos of her
own products, as against 500,000 pesos in 1810. [150] Sugar in 1782,
was the only product which was attracting any attention, because at the
time, thirty-thousand piculs of it had been exported; in 1840, 146,661
piculs were exported; in 1854 the amount had increased to 566,371,
almost four times greater than in 1840; and in 1857 the amount reached
714,059 piculs. [151] Similarly, the amount of hemp exported increased,
in spite of the fact that it found its way in the world's market for
the first time only in the early part of the nineteenth century. [152]
The same effect that was observed in connection with the opening of
Manila followed that of the other ports. The production of the regions
around the new ports increased as shown by export statistics, and
commercial activity was stimulated, as shown in the greater movement
of ships. For example, Sual in 1857 sent abroad twelve ships with rice,
and two hundred and twenty-five ships to Manila, also loaded with rice;
in 1860, sixty ships went abroad, and one hundred and seventy-two
to Manila, loaded mostly with the same cargo. Again, although in the
first three or four years there were no marked increase in her exports,
Iloilo by 1859 began to show signs of increasing productivity. [153]
Its total value of exports, which in 1858 amounted to 82,000 pesos,
had increased to 1,000,000 pesos in 1863.
Furthermore, the opening of Iloilo encouraged production in the
island of Negros. Previous to the new era the conditions there were
described thus: "... before the happy event that we are considering,
that island was uncultivated, thinly populated, and above all, without
any kind of production to keep commerce alive; besides the Governor,
the Alcalde mayor, and the curates sent by the religious orders,
there were no other Spaniards; only one European, a French doctor by
the name of Gaston, had settled there, cultivating sugar cane, and
now and then sending some cargoes to Manila. [154] Again, Jagor tells
us that in 1857 there was not one iron mill to be found on the island;
and that in working with the wooden mill, about 30% of the sap remained
in the cane, even after it had been thrice passed through. However,
the old wooden presses were disappearing, and were being supplanted
by iron mills run by steam or carabao. These mills the natives had no
difficulty in obtaining because they could get them on credit from
the warehouses of the English importers. Instead of the old Chinese
cast-iron pans which were in use, far superior articles had been
imported from Europe; and many large factories worked by steam power
and with all modern improvements had been established. In agriculture,
likewise, great progress was noticeable. Improved plows, carts, and
good farming implements generally were to be had in plenty. [155]
After the opening, the 4,000 piculs of sugar produced in Negros in
1856 had increased to 100,000 in 1864 for exportation; there were
25 Europeans in the same year, 7 machines run by steam in the towns
of Bacolod, Minuluan, and Bago, and 45 run by animal power. Similar
advance characterized the other parts of the islands. [156]
The increased production, due to the improved methods of cultivation,
had a great effect on the inhabitants of the islands, for, not only did
it bring about greater welfare because of more adequate satisfaction
of their necessities, but also because it developed a demand for other
necessities; hence, raising the standard of living. Referring to the
same phenomenon in Iloilo Mr. Loney in a report as vice-consul of Great
Britain, said that the current testimony of all the elder residents
in the province was that during the last few years a very marked
change had taken place in the dress and general exterior appearance
of the inhabitants of the large pueblos, owing in great measure to
the comparative facility with which they obtained articles which
were formerly either not imported, or the price of which placed them
beyond their reach. In the interior of the houses the same change was
observable in the furniture and other arrangements, and the evident
wish to add ornamental to the more necessary articles of household
use. [157]
And since the opening of the ports, a great many people, especially
mestizos, who before traded in manufactured goods purchased in Manila,
abandoned their business, and, unable to compete with the Chinese
dealers, had betaken themselves to the raising of sugar, and other
products to the great benefit of the country. [158] And, thus, the
greater exploitation of natural resources gave rise to the demand for
better means of communication, [159] and other material improvements.
The material progress of the Filipinos wrought great changes in
the social population, mind, and structure. Though not affecting
the majority of the people, economic advance paved the way for
the development of the spirit of independence and criticism, which
characterizes an independent and stable middle class. It was that
class, which, because of contact with the new ideas brought by the
newcomers, and of increasing material power, first questioned the
abuses of the government, and demanded social reforms. [160]
Furthermore, the law that all the energy in the growth and activity of
a population is derived from the physical world, and hence, density of
population is dependent on material progress, is well illustrated by
the increase of population in this country during the last century,
especially its first half. [161] In turn, density of population made
possible further social progress. [162]
Conclusion.
Why is it that writers attribute great significance to the coming of
the foreign business men, especially the American and British? [163]
Why was it that the opening of the ports, and the coming of the
foreigners, resulted in the material progress of the country? Two
circumstances are of prime importance in considering the growth of
new settlements, and the conditions determining their economic and
social progress. The first is whether or not they possess markets
for commodities which their natural resources enable the people to
produce easily. This condition is important for, without markets in
other communities new countries can possess no material advantage over
old ones in the production of wealth. Now, the opening of Philippine
ports to foreigners brought our products in contact with the world's
market, without which it would have been useless to attempt to produce
any more than what was required by the local demand. In other words,
the world's demand for the commodities we produce easily, served as
an effective stimulus to further production.
The second circumstance affecting the growth of a new country is
the extent to which the people are able to secure the co-operation
of capital from older communities to assist them. There are several
ways by which capital may co-operate in the development of a new
territory. The first is, where capital in the form of stocks of
commodities of all kinds is advanced or sold upon credit by the
commercial houses. This has been used in this country. The example of
Mr. Nicholas Loney, an Englishman, agreeing to be paid for his sugar
machineries with the increased earnings due to the use, by the Filipino
planters, of such machines, is a good illustration of how foreign
capital could be utilized to advantage by all parties concerned. On
the one hand, the planter improved his method of cultivation,
thereby increasing his produce, and, on the other, the foreign
merchant sold more of his imported machineries, and exported more of
the products of the Philippines to his country. [164] Furthermore,
labor is not without some benefit, for the payment of higher wages is
then possible. The second way by which capital may co-operate is by
providing transportation facilities to connect a new country with the
markets, and especially with those so necessary to its prosperity;
for example, by organizing steamboat companies, building important
roads, and, above all, constructing railroads. This also was done
in this country; the building of the Manila-Dagupan railroad, for
example, has had a remarkable influence upon the economic progress
of the provinces through which it passed.
Thus is explained why it is that the opening of the Philippines to
the outside world caused great social changes.