The inter-island trade of the Filipinas Islands is at present quite
active, as is shown by the latest reports received. Its importance is
well worth consideration, since the commodities which are traded in
this way constitute the greater part of the cargoes of the export
commerce. Tortoise-shell, gold, birds'-nests, balate, wax, cacao,
and other products form cargoes of great value which come from
the provinces. The exclusive proprietors of this commerce are the
alcaldes-mayor of the provinces, and the rich mestizos and Chinese, who
in this traffic have made exorbitant profits, for it is these alone who
exclusively avail themselves of the rise in prices which is produced in
Manila by the arrival there of foreign vessels together. This causes
those posts of alcalde there to be very eagerly sought, since in only
three years of holding them they allow [the making of] a fortune;
and also that the class of mestizos and Chinese is the only one that
is sure of becoming rich in Filipinas.... The result is, that with
the exception of the great fortunes which in other times were made in
the privileged commerce of Nueva España, it is this [coasting trade]
from which have proceeded the fortunes of Manila. [This branch of trade
is exempt from all duties, a privilege which does not benefit either
the agriculture or the other industries of the Indians, since they
always sell at the same price, and have no share in the profits of
the trade. Nor is this commerce promoted by the freedom from duties,
for it will always continue and always yield great profits to those
who carry it on--who can well afford to pay a moderate tax on their
lucrative trade, especially as it is partly for their benefit that
the government incurs so great expense for curbing the piracies of
the Moros. It is recommended:] That all commodities, whether natural
products or those of industry, which arrive at the port of Manila by
sea from the provinces shall pay one per cent on the prices current
in that city; and from this tax shall be exempted only rice (whether
in the hull or cleaned), cocoanut oil, and fresh fruits, as being
articles of prime necessity for the Indians. That no duty shall
be collected for those same products when they are transported by
land, or by the rivers and bayous of the island of Luzon. And that,
from the time when this law shall go into effect, the power which
the municipality of Manila has to tax the value of the provisions
which come from the provinces shall be suppressed. The exemption from
duties will tend, in regard to the provinces of Luzon, to encourage in
that island preëminently, as is desirable, agriculture and industry,
and at the same time will save to the custom-house the new expenses
which it would [otherwise] have to incur for establishing posts and
men to guard against smuggling.