Chapter I: Part 1

A Source Book of Philippine History

To Supply a Fairer View of Filipino Participation and Supplement the
Defective Spanish Accounts

PHILIPPINE PROGRESS PRIOR TO 1898

By AUSTIN CRAIG and CONRADO BENITEZ

Of the College of Liberal Arts Faculty of the University of the
Philippines

Philippine Education Co., Inc., Manila, 1916

The following 720 pages are divided into two volumes, each of which, for the convenience of the reader, is paged separately and has its index, or table of contents:

VOLUME I

I. The Old Philippines' Industrial Development

(Chapters of an Economic History)

I.--Agriculture and Landholding at the time of the Discovery and Conquest. II.--Industries at the Time of Discovery and Conquest. III.--Trade and Commerce at the Time of Discovery and Conquest. IV.--Trade and Commerce; the Period of Restriction. V.--The XIX Century and Economic Development.

By Professor Conrado Benitez

II. The Filipinos' Part in the Philippines' Past

(Pre-Spanish Philippine History A. D. 43-1565; Beginnings of Philippine Nationalism.)

By Professor Austin Craig

VOLUME II

III. The Former Philippines thru Foreign Eyes

(Jagor's Travels in the Philippines; Comyn's State of the Philippines in 1810; Wilkes' Manila and Sulu in 1842; White's Manila in 1819; Virchow's Peopling of the Philippines; 1778 and 1878; English Views of the People and Prospects of the Philippines; and Karuth's Filipino Merchants of the Early 1890s)

Edited by Professor Craig

Made in Manila--Press of E. C. McCullough & Co.--The Work of Filipinos

EDITOR'S EXPLANATIONS AND ACKNOWLEDGMENTS

This work is pre-requisite to the needed re-writing of Philippine history as the story of its people. The present treatment, as a chapter of Spanish history, has been so long accepted that deviation from the standard story without first furnishing proof would demoralize students and might create the impression that a change of government justified re-stating the facts of the past in the way which would pander to its pride.

With foreigners' writing, the extracts herein have been extensive, even to the inclusion of somewhat irrelevant matter to save any suspicion that the context might modify the quotation's meaning. The choice of matter has been to supplement what is now available in English, and, wherever possible, reference data have taken the place of quotation, even at the risk of giving a skeletony effect.

Another rule has been to give no personal opinion, where a quotation within reasonable limits could be found to convey the same idea, and, where given, it is because an explanation is considered essential. A conjunction of circumstances fortunate for us made possible this publication. Last August the Bureau of Education were feeling disappointment over the revised school history which had failed to realize their requirements; the Department of History, Economics and Sociology of the University were regretting their inability to make their typewritten material available for all their students; and Commissioner Quezon came back from Washington vigorously protesting against continuing in the public schools a Philippine history text which took no account of what American scholarship has done to supplement Spain's stereotyped story. Thus there were three problems but the same solution served for all.

Commissioner Rafael Palma, after investigation, championed furnishing a copy of such a book as the present work is and Chairman Leuterio of the Assembly Committee on Public Instruction lent his support. With the assistance of Governor-General Harrison and Speaker Osmeña, and the endorsement of Secretary Martin of the Department of Public Instruction, the Bureau of Education obtained the necessary item in their section of the general appropriation act. Possibly no one deserves any credit for conforming to plain duty, but after listing all these high officials, it may not be out of place to mention that neither has there come from any one of them, nor from any one else for that matter, any suggestion of what should be said or left unsaid or how it should be said, nor has any one asked to see, or seen, any of our manuscript till after its publication. Insular Purchasing Agent Magee, who had been, till his promotion, Acting Director of the Bureau of Education, Director Crone, returned from the San Francisco Exposition, and Acting Auditor Dexter united to smoothe the way for rapid work so the order placed in January is being filled in less than three months. Three others whose endorsements have materially assisted in the accomplishment of the work are President Villamor of our University, Director Francisco Benitez of its School of Education, and Director J. A. Robertson of the Philippine Library. And in recalling the twelve years of study here which has shown the importance of these notes there come to mind the names of those to whom I have been accustomed to go for suggestion and advice: Mariano Ponce, of the Assembly Library, Manuel Artigas, of the Filipiniana Section of the Philippines Library, Manuel Iriarte of the Executive Bureau Archives, Dr. T. H. Pardo de Tavera and Epifanio de los Santos, associates in the Philippine Academy, Leon and Fernando Guerrero, Jaime C. De Veyra, Valentin Ventura, of Barcelona, J. M. Ramirez, of Paris, the late Rafael del Pan, José Basa, of Hongkong, and Doctor Regidor, of London, all Filipinos, Doctor N. M. Saleeby, H. Otley Beyer, Dr. David P. Barrows, now of the University of California, along with assistance from the late Professor Ferdinand Blumentritt, of Leitmeritz, Dr. C. M. Heller, of Dresden, and the authorities of the British Museum, Congressional Library, America Institute of Berlin, University of California Library, and the Hongkong and Shanghai public libraries and Royal Asiatic Society branches.

It is due the printer, Mr. Frederic H. Stevens, manager of E. C. McCullough & Co.'s press; Mr. John Howe who figured out a sufficient and satisfactory paper supply despite the war-time scarcity; and Superintendent Noronha, that after the first vigorous protests against departures from established printing-house usages, they loyally co-operated in producing a book whose chief consideration has been the reader's use. Paper, ink, special press-work and the clear-cut face chosen for the hand-set type have combined to get a great deal more matter into the same space without sacrifice of legibility; putting minor headings in the margin has been another space-saver which as well facilitates reference, while the omission of the customary blank pages and spaces between articles has materially aided in keeping down unnecessary bulk. Printed in the usual style this book should have run over twelve hundred octavo pages as against its under two-thirds that number of a but slightly larger page.

And finally, my colleague, Professor Conrado Benitez, besides furnishing promptly his part of the manuscript has been chief adviser and most zealous in carrying out our joint plan.

Austin Craig.

University of the Philippines,
March 27, 1916.

CONTENTS

Page

I.--The Old Philippines' Industrial Development,
by Conrado Benitez 1

II.--The Filipinos' Part in the Philippines' Past:

Pre-Spanish Philippine history, A. D. 43-1565.
(Introduction, by Austin Craig) 77
Pre-historic civilization in the Philippines,
by Elsdon Best 79
A thousand years of Philippine history before the coming
of the Spaniards, by Austin Craig 91
Translation by W. W. Rockhill of a Chinese book of 1349 102
Spanish unreliability; early Chinese rule over Philippines;
and reason for indolence in Mindanao; from Salmon's
"Modern History," 1744 104
Bisayans in Formosa, by Dr. Terrien de Lacouperie 105
The Tagalog Tongue, by José Rizal 106
Philippine tribes and languages, by Prof. Ferdinand
Blumentritt 107
Beginnings of Philippine Nationalism (Introduction,
by Austin Craig) 118
The Friar Domination in the Philippines, by M. H.
del Pilar 119
Archbishop Martinez's secret defense of his Filipino
clergy 121
Nineteenth century discontent 128
The liberal governor-general of 1869-1871, by Austin
Craig 132
The rebellion in the Philippine Islands, by John Foreman 133
Filipinos with Dewey's squadron, from the Hongkong
Telegraph 136
A prediction of 1872 136

Reproductions of twelve early maps relating to Further India and the Philippines. Following page 136

PHILIPPINE PROGRESS PRIOR TO 1898

THE OLD PHILIPPINES' INDUSTRIAL DEVELOPMENT

Chapters of an Economic History

by Conrado Benitez, A. M. (Chicago)

Assistant Professor of Economics and Sociology in the University of the Philippines

I. Agriculture and Landholding at the time of the Discovery and
Conquest.
II. Industries at the Time of Discovery and Conquest.
III. Trade and Commerce at the Time of Discovery and Conquest.
IV. Trade and Commerce; the Period of Restriction.
V. The XIX Century and Economic Development.

PHILIPPINE EDUCATION CO., INC., MANILA, 1916

FILIPINO WRITERS QUOTED IN "THE OLD PHILIPPINES' INDUSTRIAL DEVELOPMENT":

Citizens of the Philippine Islands, "Memorial to the Council," Manila, 1586. Gobernadorcillo Nicolas Ramos, "Affidavit for Governor Dasmariñas," Cubao, 1591. Chief Miguel Banal, "Petition to the King of Spain," Manila, 1609. Governor Manuel Azcarraga y Palmero, "La Libertad de Comercio en las Islas Filipinas," Madrid, 1872. Gregorio Sangclanco y Gozon, LL. D., "El Progreso de Filipinas," Madrid, 1884. Dr. Jose Rizal Mercado y Alonso, "Annotations to Morga's Sucesos de las Islas Filipinas," Paris, 1890. Rizal's La Indolencia de los Filipinos, Madrid. 1889. T. H. Pardo de Tavera, M. D., "Philippine Census, Volume I, History," Manila, 1903. Tavera's Resultados del Desarrollo Economico de Filipinas, Manila, 1912. Antonio M. Regidor, D.C.L., (with J. Warren T. Mason), "Commercial Progress in the Philippine Islands," London, 1905.

Made in Manila--Press of E. C. McCullough & Co.--The Work of Filipinos

INTRODUCTION

Need of more study of Philippine Economic Development.

The Spanish writers, and with them the Filipinos as well as, to a great extent, writers of Philippine treatises in other languages, have over-emphasized the political history of the Philippines. The history of this country has been regarded but as the history of the Spaniards in it, and not of its people, the Filipinos. [1] Hence arises the need of studying our history from the point of view of the development of our people, especially to trace and show the part played by them in Philippine social progress as a whole. [2]

The study of the economic history of a country is important also because economic forces play a great part in the development of any people. Indeed, some claim that all history may be explained in terms of economic motives. This is known as the economic interpretation of history. [3] Without going into the controversy centering around this theory, we can readily see that what we know as civilization has a two-fold basis, the physical and the psychical. And it is only after the physical basis is secured, that further psychical advance is possible. "Among all species, and in every stage of evolution, the extent of aggregation and its place or position are determined by external physical conditions. Even when men have become united by sympathies and beliefs, the possibility of perpetuating their union is a question of the character and resources of their environment. The distribution of food is the dominating fact. Animals and men dwell together where a food supply is found, or may be certainly and easily produced. Other physical circumstances of the environment, however, such as temperature and exposure, surface and altitude, which make life in some places comparatively easy, in others difficult or impossible, exert an influence not to be overlooked." (Franklin Henry Giddings, The Principles of Sociology, p. 82. New York: 1911.)

We need not trace the history of early civilizations to show the influence exerted by physical factors. We need only to recall the motives, familiar to all, which led to the discovery of America, namely, the closing of the trade routes to the East through the conquest of the Turks. And the history of this country itself furnishes many illustrations. Both ancient and modern writers have had a good deal to say about the strategic position of the Philippine Islands in relation to the countries bordering around the Pacific Ocean. [4] It was that central geographical position which explained the marked predominance of Manila as a trade depot over all the other ports in the Orient, at one time in our history. That was, furthermore, the reason why the Spaniards kept the country; they wanted to use it "as a means to be nearer, and to reach more quickly, the rich country of spices, and then the continent of Asia, Japan, and the Orient in general." [5]

Finally, we should distinguish the various causes that explain historical events. For example, a good deal of what has been known as the religious question in this country, is not concerned with religion at all, but chiefly with economics. It is not always easy to distinguish these various causes; a fact which only goes to explain the one-sided point of view which has prevailed till the present. But, that the questions connected with the means of getting a living were considered paramount, even long before the formal exposition of the economic interpretation of history, may be seen from the words of the provincials of the religious orders in a remonstrance addressed to the governor and captain-general of the Philippines, wherein they depicted the deplorable conditions in the Islands:

"Third, all the Christian Indians would be more steadfast and rooted in the holy faith, and would become effective and most suitable instruments for (gaining) new conversions of infidels (and) apostates, the infidels themselves beholding the abundant wealth and profit, and other benefits, of the Christian Indians; FOR IT IS THE TEMPORAL WELFARE EVIDENT TO THEIR SENSES WHICH, AS EXPERIENCE TEACHES US, STRONGLY INFLUENCES BOTH CLASSES OF INDIANS, TO BE CONVERTED OR TO MAINTAIN THEMSELVES IN THE CHRISTIAN FAITH." [6]

Divisions of present work.

The present work is built around a group of ideas briefly summarized as follows: The first three chapters portray the industries and commerce at the time of the coming of the Spaniards; and explain the causes that led to their decline; the fourth chapter dwells upon the era of restriction, and the Manila-Acapulco trade, which, for over two centuries, dominated this country, and has had such depressing effect upon economic growth; the last chapter takes up the era of liberalism, during the nineteenth century, and shows how the opening of the Philippines to foreign influence resulted in the development of its natural resources. Any attempt to trace Philippine economic development in the past three centuries must necessarily start, not so much with a detailed account of how the industries developed as with an exposition of how they were not developed. On the other hand, the remarkable social progress of the last half of the nineteenth century, following the opening of the markets of the world to Philippine products, is an encouraging indication of probable social advance yet to be attained.

I. AGRICULTURE AND LANDHOLDING AT THE TIME OF THE DISCOVERY AND CONQUEST

Agriculture.

At the time of the arrival of the Spaniards, agriculture in the Philippines was in a comparatively prosperous condition. [7] The Filipinos cultivated rice, which, as today, formed their chief article of food. They grew also sugar-cane, coconuts, indigo, sweet potatoes, and other tubers, various kinds of bananas, the betel-nut palm, the tamarind, lansone, and several varieties of legumes, [8] The hemp plant was likewise grown, and as we shall see later on, was used at the time for making the so-called "sinamay" cloth. [9] Cotton was cultivated, and furnished the material for weaving. Among the native fruits mentioned by Morga are: "sanctors, mabolos, tamarinds, nancas, custard-apples, papaws, guavas, and everywhere many oranges, of all kinds--large and small, sweet and sour; citrons, lemons, and ten or twelve varieties of very healthful and palatable bananas." [10]

With the coming of the Spaniards, very many plants which are commonly considered to be indigenous in this country, were introduced. [11] The most important economic plant imported since Spanish discovery was the tobacco, which today forms one of the staple crops, though it took many years before it came to anything like its present position. The cacao nut also was imported. Among the most commonly known of the others are; maize, peanut, papaya, and, also pineapple, and sweet potato. [12] All of these plants came from Mexico. [13] Coffee was introduced from Europe. [14]

Live stock.

The Filipinos at the time of discovery had domestic animals, dogs, cats, pigs, goats and buffaloes, i.e. carabaos. [15] "There were no horses, mares, or asses in the islands, until the Spaniards had them brought from China and brought them from Nueva Espana." [16]

The Kings of Spain in their instructions to the governors-general of the Philippines were solicitous about this matter of supplying this country with sufficient live stock to carry on farm work. [17] The early accounts of expeditions to find food for the Spaniards show that chickens were raised by the Filipinos. [18]

It has been truly said that the Filipino has been affected by the centuries of Spanish sovereignty far less on his material side than he has on his spiritual. [19] For as we read the early accounts about agricultural life at the time of discovery and conquest, and compare it with that of a decade ago, we do not find any marked change or advance. [20] The early Filipinos knew how to construct implements for the cultivation of their rice, such as for hulling and separating the chaff from the grain; and they had wooden mortars and pestles for pounding and whitening rice. Then, the women did most of the work of pounding the rice for use, whereas today, the men do it. [21] Furthermore, in the early days, the system of irrigating the rice fields that is used today was known and practiced. [22] Of course, the so-called caingin method of cultivation prevailed, but the considerable amounts of rice which at various times were contributed by the Filipinos for the support of the Spanish conquerors could not have been produced under such a crude system of cultivation, but only by the more advanced one, which closely resembled that of the present time. [23]

Land holding.

The lands of the ancient Filipinos were divided among the whole barangay, so that each one had his holding and no resident of one barangay was allowed to cultivate lands in another barangay unless he had acquired them by inheritance, gift, or purchase. In some barangays the lands belonged to the chief through purchase from the original owners. In some localities the chiefs or principal personages also owned the fisheries, and their rights were respected. [24]

With the coming of the Spaniards, lands were assigned to the colonists, of which they were to have perpetual ownership after four years' residence. [25] Encomiendas of the Indians were also granted to the discoverers and conquerors. [26] It is in connection with the administration of these encomiendas that we find in the annals of the Philippines many accounts of abuses and extortions practiced on the natives, and the consequent revolts. It must not, however, be supposed that the Filipinos were actually dispossessed of their lands by the king; for, although according to the constitutional law of the Indies the land and the soil in all colonies were the domain of the king [27] and, therefore, could be assigned to deserving persons, there were royal decrees intended to protect the natives in their time-honored possession. [28] The question of land ownership has, however, from earliest times been the source of conflicts between the religious orders and the people. Without going into the technical,--and perhaps today, academic,--question of which side had the better legal argument, the fact cannot be denied that the Filipinos had always protested, throughout the various centuries of contact with the Spaniards, against what they considered to be usurpation of their lands. [29]

II. INDUSTRIES AT THE TIME OF DISCOVERY AND CONQUEST

Shipbuilding.

One of the most important industries in the Philippines during this period was shipbuilding. We would naturally expect this industry to be developed among the Filipinos, for they belong to a seafaring race that for centuries had been pushing their way northward and taking possession of the islands of this part of the Pacific; furthermore, once settled in this country, they had abundant supply of good timber for building purposes. [30] Morga described the various kinds of ships and boats used by the Filipinos. [31] There seems to be no doubt that the Filipinos have forgotten much of what they knew about shipbuilding. [32]

The Spaniards took advantage of the abundance of materials in this country, and engaged in shipbuilding on a large scale. Shipyards were established at various places, [33] and to them the Filipinos were compelled to go and work. To the honor and glory of Spain, some of the largest ships in the world at that time were built in the Philippines. [34]

When the role played by the Filipinos in the history of Spanish achievement in the Philippines comes to be finally written, their share, in the form of service, direct--and indirect--and suffering of different kinds, will occupy a considerable part of the account. [35] First of all, the many lives sacrificed in connection with the building of ships should be considered. [36] Then, the effect on the industries of the country was disastrous. [37] Besides, very frequently the laborers were not paid their wages. [38] And worse than the physical cruelties practiced on them, the Filipinos were not only helping the King in the extension of his empire, but also those who actually abused them [39] to get rich. It is not strange, therefore, that we should find good intentioned persons, among them the early religious men--who wrote to the King and prayed for redress. [40] In this connection, it is of interest to add that the Filipinos who served as seamen in the galleons suffered as much as their brethren who built the ships. [41]

It is clear now why it is that the shipbuilding industry caused many revolts. [42] An interesting effect of the hardships suffered by the Filipinos was the migration of many of them to New Spain, and their settlement there. [43]

Fishing.

As, next to rice, fish formed an important part of the diet of the Filipinos, we find them engaged in the fishing industry at the time of discovery and conquest. Magellan and his party saw many fishing boats near the coasts of the islands passed by them. "All the shores of this bay (Manila) are well provided with abundant fisheries, of all kinds." [44] The other islands were described to have many large fisheries also. [45] The inland waters, too, furnished the inhabitants with abundant fish supply.

Most of the devices used today for catching fish were known then to the ancient Filipinos. "The natives' method of catching them is by making corrals of bejucos. They catch the fish inside these corrals, having made the enclosures fast by means of stakes. They also catch the fish in wicker baskets made from the bejucos, but most generally with atarrayas (a species of fishing net), esparaveles (a round fishing net, which is jerked along by the fisher through rivers and shallow places), other small barrederas (a net of which the meshes are closer and tighter than those of common nets, so that the smallest fish may not escape it), and with hand lines and hooks." [46] The salambao was also used. [47]

Fishing for pearl oysters and other precious products of the sea was also a developed industry at the time of discovery and conquest. These products were exported to other countries. [48]

Mining and metal work.

The early accounts abound in glowing descriptions of the mining wealth of this country. "In many (indeed in most) islands are found amber and civet, and gold mines--these especially in the mountain ranges of Pangasinan and Paracale, and in Pampanga. [49] Consequently there was hardly any Filipino who did not possess chains and other articles of gold, according to the chroniclers. Indeed, many of the early settlers in the country saw no other evidence of wealth but the mines and metals. [50]

The early Filipinos did not only know how to work mines, but also knew the art of metal working. From the precious metals they made jewelry and all kinds of ornaments. [51] They also used metal for some of their weapons. [52] And the most noteworthy evidence of their progress in working metals was their use of firearms. [53]

Chief among the industries connected with the various kinds of palms found in the Philippines was the distillation of the sap into alcohol, a process known to the Filipinos long before Spanish arrival. "They draw a great quantity of wine from the palm-trees; one Indian can in one forenoon obtain two arrobas of sap from the palm-trees that he cultivates. It is sweet and good, and is used in making great quantities of brandy, excellent vinegar, and delicious honey." [54] "Their drink is a wine made from the tops of coco and nipa palm, of which there is great abundance. They are grown and tended like vineyards, although without so much toil and labor. Drawing off the 'tuba,' they distilled it, using for alembics their own little furnaces and utensils, to a greater or less strength, and it becomes brandy. This is drunk throughout the islands." [55]

Other uses similar to those of today were made of the different parts of the coconut and other palms. [56]

Textile industries.

Weaving was one of the industries well-known to the Filipinos long before the coming of the Spaniards. Contemporary writers all speak of the great quantity of cloths, especially cotton, woven in the country. [57] Says Sande: "All know how to raise cotton and silk, and everywhere they know how to spin and weave for clothing." [58]

Besides cotton, the fibers of the abacá or hemp plant was also used for weaving; in fact, the latter must have been used even before the former. [59] They wove cloths also from Piña, and from silk imported from China. [60] The women knew the art of making lace and of embroidery. [61]

Miscellaneous industries.

That the Filipinos first seen by the Spaniards were not wandering savages, as commonly assumed by later day writers, is shown by the manner in which they built their houses--which very much resembled those of today [62],--and fixed their settlements. [63] It is from such and other similar facts that Rizal, [64] and other writers, [65] claimed for the early Filipinos a higher degree of culture than they were given credit for.

Among the other industries at the time of discovery and conquest were: the manufacture of gun-powder; hunting for edible birds' nests, and exporting them to China; preparing hides, especially of deer, for export to Japan. [66] "As they possess many civet cats, although smaller than those of Guinea, they make use of the civet and trade it. [67] They also carved the statues of their anitos." [68]

Conclusion.

To quote Rizal, "All the histories of those first years, in short, abound in long accounts about the industry and agriculture of the natives. Mines, gold-washings, looms, farms, barter, naval construction, raising of poultry and stock, weaving of silk and cotton, distilleries, manufactures of arms, pearl fisheries, the civet industry, the horn and hide industry, etc., are things encountered at every step, and, considering the time and the conditions in the islands, prove that there was life, there was activity, there was movement." [69]

Other evidences could be presented to strengthen the conclusion advanced here. [70]

The only question that remains to be answered is that asked by Rizal: "How then, and in what way, was that active and enterprising infidel native of ancient times converted into the lazy and indolent Christian, as our contemporary writers say?" In connection with the discussion of ancient industries we had occasion to see that the Filipinos had neglected and even forgotten many such industries. Of this fact there is plenty of reliable proof. [71]

What were the causes that led to the decay of these old industries? "First came the wars, the internal disorders which the new change of affairs naturally brought with it." [72] Then, as already pointed out, the effect of shipbuilding was fatal to the very lives of the people. [73] Add to these the abuses practiced by the encomenderos, and it is easy to understand the reason for the decline of the industries at the time. [74] However, in this connection, the benefits arising out of Spanish conquest should not be forgotten. [75]

III. TRADE AND COMMERCE AT THE TIME OF DISCOVERY AND CONQUEST

Centuries before Spanish discovery the Filipinos were in regular intercourse with the neighboring countries of China, Japan, Borneo, and others. In the work of Chao Ju-kua, a Chinese geographer of the thirteenth century, there is a chapter on Philippine trade, from which we learn that the "foreign traders import porcelain, commercial gold, iron vases for perfumes, leaden objects, glass, pearls of all colors, iron needles," [76] black damask, and other silk fabrics, fish nets, and tin, and also silk umbrellas, and a kind of basket woven from rattan. In exchange, the Filipinos exported cotton (perhaps the "kapok" or tree cotton), yellow wax, strange cloth (foreign cloth: sinamay, a light fabric made from abacá,--and other textiles of the country.--Blumentritt's note), coconuts, onions, (camotes?--Blumentritt's note), and fine mats; also pearls, shells (i. e., tortoise-shell.--Blumentritt's note), betelnuts, and jute (yuta) textiles. (Yu-ta seems to be the abacá.--Blumentritt's note). [77]

Domestic trade.

The first Spaniards who came to the Philippines observed a lively commercial intercourse, not only among the peoples of the different islands, but also with the near-by countries. [78] The chief method of exchange was by means of barter, [79] though oftentimes gold dust was used.

With the coming of the Spaniards, domestic trade was upset. First of all, restrictions were imposed upon trade; communication between the villages was restrained. [80] Though later ordinances allowed freedom of commerce between villages and provinces, [81] the spirit of restriction predominated until modern times. [82]

Then, the government officials, though in many decrees and ordinances prohibited to engage in trade, [83] used their position as a means of gaining profits in trade. [84] This evil prevailed till later days. [85] However, as seen by Dr. Tavera, trading by the officials was not without its good effect. [86]

Trade relations with oriental countries.

The coming of the Spaniards opened a new market to the products of the Orient, and Manila soon became the great distributing center of the East. [87] "The merchants and business men form the bulk of the residents of the islands, because of the great amount of merchandise brought there--outside of native products--from China, Japan, Maluco, Malacca, Siam, Cambojia, Borneo, and other districts." [88]

From China, from thirty to forty ships sailed every year usually in March, and reached Manila in fifteen or twenty days; here the traders sold their goods, and, with the exception of some of the larger dealers, returned towards the end of May or during the first days of June, in order to avoid the stormy season. Morga gives a detailed list of the goods imported from China. [89]

The merchandise brought by the Chinese were unloaded into champans (bancas), and taken to the Parian (Chinese quarter), or to other houses and magazines outside of the city, and there freely sold. No Spaniard, Sangley (Chinese trader), or any other person was allowed to go to the ship to buy or trade merchandise, food, or anything else. The purchase price was paid in silver and reals, for the Sangleys did not want gold, or any other articles, and would not take other things to China.

From Nagasaki, Japan, came Japanese and Portuguese merchants, who brought excellent wheat-flour and highly prized salt meats. [90] The bulk of the merchandise was used in the country. Returning to Japan, during the months of June and July, they carried with them raw Chinese silk, gold, deerskin, and brazil-wood for their dyes; also honey, manufactured wax, palm and Castilian wine, civet-cats, large tibors in which to store their tea, glass, cloth, and other curiosities from Spain.

From the Moluccas, Malacca, and India, the Portuguese imported many articles, [91] and in return took with them to the Moluccas rice, wine, crockery-ware, and other wares needed there; to Malacca, gold and money, besides a few special trinkets and curiosities from Spain, and emeralds.

Smaller vessels belonging to natives of Borneo also came to Manila, bringing well-made palm-mats, a few slaves, sago, and tibors; large and small jars, and excellent camphor; these articles were bought more by the Filipinos than by the Spaniards. The Borneans took with them wine and rice, cotton cloth, and other wares of the Philippines.

"Very seldom a few vessels came from Siam and Camboja, carrying 'benzoin, ivory, and cotton cloth; rubies and sapphires, badly cut and set; a few slaves; rhinoceros horns, and the hides, hoofs, and teeth of this animal; and other goods.'" [92]

It was the goods that were imported into Manila by the Oriental traders, especially the Chinese, that formed the bulk of the commerce between the Philippines and New Spain. The only products of Philippine industry dealt with in the so-called galleon trade were gold, cotton cloth, mendriñaque, and cakes of white and yellow wax. [93] By buying from the Oriental traders their merchandise, and sending them to Mexico, the Spaniards in the Philippines made fabulous profits. It is due to this trade that those engaged in it amassed great wealth in a short time, and Manila became a great distributing center of the East. [94] The prosperity of Manila during the first years after the conquest is attributed to the fact that commerce was then unrestrained. [95] To the same cause was due the settlement of many Chinese and Japanese and other Orientals in the country. [96] To say, however, that the later restrictions upon commerce killed off all prosperity, would not be justified. [97]

IV. TRADE AND COMMERCE: THE PERIOD OF RESTRICTIONS

Hardly had wealth been created by the commerce of the first years after the conquest, when the policy of restriction found its strong supporters in the merchants of Cadiz and Seville, who, accustomed to monopolize the trade with America, looked with jealous eyes upon the rapidly growing prosperity of Manila, the new center of trade. The cotton and silk cloths from China were underselling in Mexico those coming from Spain and Peru, and a good deal of the silver was going, not to Spain, but to the East; hence, the long drawn-out rivalry between Manila, on the one hand, and Cadiz, and Seville, on the other, with America as a third party, also working for her own interest. This commercial activity was the phenomenon which dominated the Philippines for over two centuries, and had such marked influence upon its whole economic development.

Before giving the various decrees passed from time to time to regulate this commerce, it is advisable to discuss the arguments advanced by the two sides. The Spanish merchants contended that the competition of goods coming from the East would destroy the manufactures on the Peninsula; and, further, that the sending of silver to the Orient, would drain the supply available for Spain, and, therefore, in accordance with the mercantilist doctrine, should be prevented. Manila answered by saying that the goods that she exported to New Spain were different from those coming from Spain; therefore, there was really no competition between them. In other words, the demand for either kind of goods was separate from, and independent of, the demand for the other. [98] Other arguments were advanced to prove that Manila should be treated with consideration; the driving out of the Dutch from the Moluccas by the Philippine government, [99] the preservation of the missionary conquests in the Far East, [100] and the maintenance of the prestige of the Spanish crown, [101] all of these would result from the maintenance of the Philippines, by making it possible for her to support herself with the galleon trade. These, added to the fact that the trade with New Spain was not so profitable as commonly reported [102] on account of the many perils involved in it, entitled Manila to a more liberal treatment.

Restrictions.

The continued protests of the Spanish merchants finally led to the prohibition of the shipment from New Spain to Perú or Tierra-Firme of Chinese cloths brought from the Philippines. [103] "And in order that what was prohibited in one way might not be obtained in another, decrees were despatched on February 6 and December 18, 1591, ordering the total cessation of commerce between the islands and Perú. That was later extended to Tierra-Firme and Guatimala, by decrees of January 12, 1593, and July 5, 1595, forbidding the trade of China and its merchandise to all the Indias, except to Nueva España, which was left open to the Philippines." [104] In 1593 a decree absolutely limited the trade between Mexico and the Philippines to 250,000 pesos annually for the exports to Mexico, and to 500,000 pesos for the imports from Mexico, [105] to be carried in two ships not to exceed three hundred tons burden. [106] It was also decreed that "no person trade or traffic in the kingdom or in any part of China, and that no goods be shipped from that kingdom to the Philippine Islands, on the account of the merchants of those islands. The Chinese themselves shall convey their goods at their own account and risk, and sell them there by wholesale." [107] Further, it was ordered that "the Chinese merchandise and articles which have been and shall be shipped from Filipinas to Nueva España, can and shall be consumed there only, or shipped to these kingdoms after paying the duties. They can not be taken to Perú, Tierra-Firme, or any other part of the Indias, under penalty of confiscation...." [108]

"Fortunately," says Azcarraga, [109] "that tyrannical provision, meeting with the opposition of the private interests, which it so greatly injured, and among which were included those of the authorities and officials who were called upon to enforce it--was prevented from being carried in force, and thus, in reality, the Acapulco trade continued unlimited until the year 1604, when, by another decree the enforcement of previous laws was ordered." [110] However, evasion of the law was a common practice, and the galleons usually carried very much more cargo than was allowed. The abuses became so apparent that in 1635, at the instigation of the merchants of Cadiz and Seville, a special commissioner was sent to Manila, [111] who strictly enforced the law. And, in order to prevent all evasions of the law, it was decreed in 1636 to the viceroys of Perú and New Spain "to prohibit and suppress, without fail, this commerce and trade between both kingdoms, by all the ways and means possible." [112]

The rest of the seventeenth century found Manila still engaged in a great commercial controversy with the merchants of Spain; the endless number of petitions sent from the Philippines to the king bears ample testimony to the magnitude of the problem. [113]

Further petition from Manila resulted in the decreeing in 1702 that in the Philippine Islands two ships should be built, each of 500 toneladas burden, which should transport the goods permitted to that trade; that the citizens should be authorized to convey in these to Nueva España the amount of 300,000 pesos in their products and other commodities, and on the return to the Philippines to carry 600,000 pesos in silver, allowing 100 per cent gain minus the duties and expenses. [114] It was further provided in the decree that in the enumeration of the traders should be included the Spaniards in the country, and the military men stationed in the port of Cavite, excluding, however, ecclessiatical ministers, whether secular or regular, and foreigners. [115] And he who had no goods to lade was not allowed to give up his right in favor of a third person, but a new distribution was made. [116]

Induced by protests by Cadiz and Seville based on the ground that the galleons carried more cargo than allowed, and that the great abundance of silk in America had caused the decrease of the textile industry, thus causing the decline of factories in Toledo, Valencia, Seville, and Granada, a royal decree of January 8, 1718, prohibited the carrying in the galleon of silk, woven or raw, from China. [117] The only trade which could be carried on was in linen goods, porcelain, wax, cinnamon, cloves, and other goods which were not brought from Spain. [118]

More petitions came from Manila, and, finally, a royal decree of June 17, 1724, repealed that of 1720, and allowed once more the importation of Chinese silk. [119] An attempt on the part of the Viceroy of Mexico to put a stop to the importation of Chinese silk resulted in the royal decree of April 8, 1734, which, besides allowing trade in silk, increased the amount of the trade permitted to Manila to 500,000 pesos of investment and 1,000,000 of returns. [120]

The galleon trade continued during the rest of the eighteenth century, until 1811 when the last galleon sailed from Manila, and 1815, when the final return voyage was made. The next period in the history of Philippine commerce is characterized by the opening of the country to foreign influence.

Before, however, going into the next period let us see who were entitled to participate in the galleon trade. The right to ship was known as boleta or ticket, and there were as many boletas as divisions in the ship. On the average there were 1,500 such divisions, each worth from 200 to 225 pesos, a good portion of which were given to the governor-general, the religious corporations, the regidores, the favorites and privileged, and the widows of retired Spaniards. Those who had no capital to invest in merchandise sold their boletas to the merchants, and in spite of prohibition, this practice continued with impunity. The cargo consisted chiefly of Chinese and Indian silk and cotton cloths, and gold ornaments, and were sold at one hundred per cent profit in New Spain. [121] Almost all the merchants secured loans from the "Obras Pias," [122] which were funds donated for pious purposes, and two-thirds of which loaned at the following rate of interest: for Acapulco, fifty per cent; for China, twenty-five per cent; for India, thirty-five per cent; the rest of the funds formed the reserve. Besides the merchandise and silver the galleons transported the official correspondence, arms, troops, missionaries, and public officials. The officers of the galleon were highly paid. The commander, who had the title of general, made 40,000 pesos per voyage, the pilot about 20,000, [123] and the mates, 9,000 each. Most of the crew were natives. [124]

Effects of the galleon trade

What were the effects of the Manila-Acapulco trade upon the economic growth of the Philippines? There are two answers to this question. On the one hand, those who believe that the policy of restriction was necessary in order to protect the industries of Spain, of course, say that such policy was beneficial. Furthermore, it is alleged that no other economic activity could have been possible during the early part of Spanish domination because, at the time, there were no products of the country which would serve as the basis of a rich and flourishing commerce; there was no capital sufficient to exploit the natural resources of the Philippines. And to show that Manila was benefited by acting as a distributing point of Oriental goods, the prosperity of Singapore and Hongkong is cited; what prosperity would these cities enjoy if it were not for the fact that they act as entrepots of the East? [125] The very retention of the Philippines depended upon its ability to support itself in part, and the profits from the trade as a whole made that possible.

On the other hand, the galleon trade absorbed too much of the attention of the Spaniards, [126] and caused the neglect of Philippine extractive industries, especially agriculture. [127] It attracted the Spaniards into Manila, and, thus, left the rest of the country without the benefit of whatever good they could have done; and in Cebu, the point was reached when, at one time, there was not a sufficient number of persons to fill the offices of alcalde and regidores, and it was necessary to assign to the city a few boletas from Manila. [128] Lastly, it enriched only the few, [129] and the resulting economic depression checked the growth of population. [130]

Not everything, however, is to be attributed to the influence of the galleon trade; a good deal of the neglect of the country's natural resources was due to Spanish dislike of industrial activity. Azcarraga explains that characteristic by saying that the eight centuries of continuous struggle to drive out the Moors from Spain created a chivalrous spirit and a love of risky undertakings; the discovery of the New World furnished a wide sphere of action to that adventurous spirit, and the resulting emigration to the newly discovered lands depopulated the Peninsula to such an extent that labor could be had neither for the factories nor for agriculture. "The current of precious metals flowing into Spain from the mines of Mexico and Perú fascinated the Spaniards; created easy-going and indolent habits; held them off the mechanical arts, formerly called servile, and all desired to gird the word and enjoy the spoils of conquest." [131] This was the real cause of the decadence of Spanish industries, and not, as alleged by the monopolists of Spain, the competition of the Manila-Acapulco trade. With such causes operating to check development, it is no wonder that Philippine industries were in a primitive state down to the last years of Spanish domination.

V. THE NINETEENTH CENTURY AND ECONOMIC DEVELOPMENT

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.