Chapter XXX: Part II: State of the Philippines in 1810 (2)

[Scanty exports.] In a word, the only manufactured articles annually exported from the Philippine Islands are eight to twelve thousand pieces exports of light sail cloth, two hundred thousand pounds of abaca cordage assorted, and six hundred carabao hides and deer skins, which can scarcely be considered in a tanned state/ for, although the Royal Company, from the time of their establishment, long continued to export considerable quantities of dimities, calicos, stripes, checks, and coverlids, as well as other cotton and silk goods, it was more with a view to stimulate the districts of Ilocos to continue in the habit of manufacturing, and thus introduce among the inhabitants of that province a taste for industry, than the expectation of gain by the sale of this kind of merchandise either in Spain or any of the sections of America. At length, wearied with the losses experienced by carrying on this species of mercantile operations, without answering the principal object in view, they resolved, for the time being, to suspend ventures attended with such discouraging circumstances.

[Need of encouragement.] Notwithstanding so many impediments, it would not, however, be prudent in the government entirely to abandon the enterprise, and lose sight of the advantages the country offers, or indeed, to neglect turning the habitual facilities of the natives to some account. Far from there existing any positive grounds for despairing of the progress of manufacturing industry, it may justly be presumed that, whenever the sovereign, by adopting a different line of policy, shall allow the unlimited and indistinct settlement of all kinds of foreign colonists, and grant them the same facilities and protection enjoyed by national ones, they will be induced to flock to the Philippine Islands in considerable numbers, lured by the hope of accumulating fortunes in a country that presents a thousand attractions of every kind. Many, no doubt, will preferably devote themselves to commerce, others to agricultural undertakings and also to the pursuits of mining, but necessarily some will turn their attention and employ their funds in the formation of extensive manufactures, aided by intelligent instructors and suitable machinery. The newly-introduced information and arts being thus diffused, it is natural to expect they will be progressively adopted by a people already possessing a taste and genius for this species of labor, by which means manufacturing industry will soon be raised from the state of neglect and unprofitableness in which it is now left.

[Internal commerce handicapped.] The circulation of the country productions and effects of all kinds among the inhabitants of the provinces, which, properly speaking, constitutes their internal commerce, is tolerably active and considerable. Owing to the great facilities of conveyance afforded by the number of rivers and lakes, on the margins of which the Filipinos are fond of fixing their dwellings, this commerce might be infinitely greater, if it was not obstructed by the monopoly of the magistrates in their respective districts and the unjust prerogative, exercised by the city, of imposing rates and arbitrary prices on the very persons who come to bring the supplies. Nevertheless, as the iniquituous operations of the district magistrates, however, active they may be, besides being restricted by their financial ability, regularly consist of arrangements to buy up only the chief articles, and those which promise most advantage, with least trouble; as that restless inquietude which impels man on, under the hope of bettering his condition, acts even amidst rigor of oppression, a certain degree of stimulus and scope is still left in favor of internal trade.

[Inter-island traffic.] Hence it follows, that there is scarcely an island or province, that does not carry on some traffic or other, by keeping up relations with its neighbors, which sometimes extend as far as the capital; where, in proportion as the produce and raw materials find a ready market, returns suitable and adequate to the consumption of each place, respectively, are obtained. If, however, it would be difficult to form an idea, even in the way of approximation, of the exchanges which take place between the various provinces, a task that would render it necessary to enumerate them, one by one, it is equally so to make an estimate of the total amount of this class of operation carried on in Manila, their common center. Situated in the bottom of an immense bay, bathed by a large river, and the country round divided by an infinite number of streams and lakes descending from the provinces by which the capital is surrounded, the produce and effects are daily brought in and go out of suburbs so extended in a diversity of small vessels and canoes, without its being possible to obtain any exact account of the multiplicity of transactions carried on at one and the same time, in a city built on so large a scale.

[Local markets.] Besides the traffic founded on ordinary consumption, the necessity of obtaining assortments of home-manufactured as well as imported goods, in order to supply the markets, known by the name of tianguis, and which are held weekly in almost every town, there is another species of speculation, peculiar to the rich natives and Sangley mestizos, an industrious race, and also possessed of the largest portion of the specie. This consists in the anticipated purchase of the crops of indigo, sugar, rice, etc., with a view to fix their own prices on the produce thus contracted for, when resold to the second hand. A propensity to barter and traffic, in all kinds of ways, is indeed universal among the natives, and as the principal springs which urge on internal circulation are already in motion, nothing more is wanting than at once to destroy the obstacles previously pointed out, and encourage the extension of luxury and comforts, in order that, by the number of the people's wants being increased, as well as the means of supplying them, the force and velocity of action may in the same proportion be augmented.

[External commerce.] Under "External Commerce" generally are comprised the relations the Philippine Islands keep up with other nations, with the Spanish possessions in America, and with the mother country; or, in other words, the sum total of their imports and exports.

[Outside deterrents.] Many are the causes which, within the last ten or twelve years, have influenced the mercantile relations of these Islands, and prevented their organization on permanent and known principles. The chief one, no doubt, has been the frequent and unforeseen changes, from peace to war, which have marked that unhappy period, and as under similar circumstances merchants, more than any other class of persons, are in the habit of acting on extremes, there have been occasions in which, misled by the exaggerated idea of the galleon of Acapulco, and anxious to avail themselves of the first prices, generally also the highest, foreign speculators have inundated Manila with goods, by a competition from all quarters; and others, owing to the channels being obstructed, when this market has experienced an absolute scarcity of commodities, as well as of funds necessary to continue the usual and almost only branch of commerce left. The frequent failure of the sugar and indigo crops, has also in many instances restrained the North Americans and other neutrals from coming to these Islands with cargoes, and induced them to prefer Java, where they are at all times sure of finding returns. Besides the influence of these extraordinary causes on the uncertainty and irregularity of external commerce, no small share must also be attributed to the strangeness of the peculiar constitution of the country, or the principles on which its trade is established.

[Domestic discouragements.] Scarcely will it be believed, in the greater part of civilized Europe, that a Spanish colony exists between Asia and America, whose merchants are forbidden to avail themselves of their advantageous situation, and that, as a special favor only are they allowed to send their effects to Mexico, once a year, but under the following restrictions. It is a necessary condition, that every shipper shall be a member of the Board of Trade (Consulado), and therein entitled to a vote, which supposes a residence of some years in the country, besides the possession of property of his own to the amount of $8,000. He is compelled to join with the other members, in order to be enabled to ship his goods in bales of a determined form and dimensions, in one single vessel, arranged, fitted out, and commanded by officers of the royal navy, under the character of a war ship. He has also to contribute his proportion of $20,000, which, in the shape of a present, are given to the commander, at the end of every round voyage. He cannot in any way interfere in the choice or qualities of the vessel, notwithstanding his property is to be risked in her; and what completes the extravagance of the system, is, that before anything is done he must pay down twenty-five or forty per cent for freight, according to circumstances, which money is distributed among certain canons of the church, aldermen, subalterns of the army, and widows of Spaniards, to whom a given number of tickets or certified permits to ship are granted, either as a compensation for the smallness of their pay, or in the way of a privilege; but on express conditions that, although they themselves are not members of the Board of Trade, they shall not be allowed to negotiate and transfer them to persons not having that quality. In the custom house nothing being admitted unless the number of bales shipped are accompanied by corresponding permits, and as it besides frequently happens that there is a degree of competition between the parties seeking to try their fortune in this way, the original holders of the permits very often hang back, in such a manner that I have seen $500 offered for the transfer of a right to ship three bales, which scarcely contained goods to the amount of $1,000. Such, nevertheless, is the truth, and such the exact description of the famous Acapulco ship, which has excited so much jealousy among the merchants of Seville and Cadiz, and given rise to such an infinite number of disputes and lawsuits.

[Business irregularities.] So complete a deviation from the rules and maxims usually received in trade, could not fail to produce in the Philippine Islands, as in fact it has, effects equally extraordinary with regard to those who follow this pursuit. The merchant of Manila is, in fact, entirely different from the one in Cadiz or Amsterdam. Without any correspondents in the manufacturing countries and consequently possessed of no suitable advices of the favorable variations in the respective markets, without brokers and even without regular books he seems to carry on his profession on no one fixed principle, and to have acquired his routine of business from mere habit and vague custom. His contracts are made out on stamped paper, and his bills or promissory notes no other than long and diffuse writings or bonds, of which the dates and amounts are kept more in the shape of bundles than by any due entry on his books; and what at once gives the most clear idea of this irregularity is the singular fact that, for the space of twenty-five and possibly fifty years, only one bankrupt has presented the state of his affairs to the Board of Trade, in conformity to the regulations prescribed by the general Statutes of Bankruptcy, whereas, numbers of cases have occurred in which these merchants have wasted or secreted the property of others with impunity. Hence have arisen those irregularities, subterfuges and disputes, in a word, the absence of all mercantile business carried on in a scrupulously punctual and correct manner. Hence, also, have followed that distrust and embarrassment with which commercial operations are attended, as well as the difficulty of calculating their fluctuations. On the other hand, as in order to send off an expedition by the annual ship to Acapulco, the previous consent of the majority of the incorporated merchants is necessary, before this point is decided, months are passed in intrigues and disputes, the peremptory period arrives, and if the articles wanted are in the market, they are purchased up with precipitation and paid for with the monies the shippers have been able to obtain at an interest from the administrators of pious and charitable funds. In this manner, compelled to act almost always without plan or concert, yet accustomed to gain in the market of Acapulco, notwithstanding so many impediments and the exorbitant premiums paid for the money lent, these merchants follow the strange maxim of risking little or no property of their own; and unaware, or rather, disregarding the importance of economy in the expenses and regularity of their general method of living, it is not possible they can ever accumulate large fortunes, or form solid and well-accredited houses.

[Merchants discouraged.] Thus oppressed by a system, as unjust as it is absurd, and conducting their affairs in the way above described, it is not strange that these gentlemen, at the same time yielding to the indolence consequent on the climate, should neglect or behold with indifference all the other secondary resources which the supplying the wants of the country and the extensive scope and variety of its produce offer to the man of active mind. Hence it follows, as already observed, that the whole of the interior trade is at present absorbed by the principal natives, the Sangley mestizos of both sexes, and a few Chinese peddlers.

[The outlook brightening.] Notwithstanding, however, the defective manner in which the generality of the merchants act, some already are beginning to distinguish themselves by the prudence of their conduct, by forwarding, in time, their orders to the manufacturers of India and China, and, in other respects guiding themselves by the principles which characterize the intelligent merchant. Finally, it is to be presumed that, as soon as the government shall have thrown down this singular and preposterous system that has been the cause of so many disorders, and proclaimed the unlimited freedom of Philippine commerce, the greater part of these people will rise up from the state of inaction in which they now live, and the relations of the colony will then assume the course and extent corresponding to its advantages of position. At least, if our national merchants should not act up to the impulse given to all kinds of mercantile enterprises by the beneficial hand of the sovereign, foreigners will not be wanting, who, relying on due toleration, will be induced to convey their fortunes and families to the Philippine Islands, and, vigorously encouraging the exportation of their valuable productions, amply secure the fruits of their laudable activity and well-combined speculations.

[Capital employed in commerce.] Were a person, judging from the numbers constituting the body of registered merchants, and supposing all of them to possess the essential requisites prescribed by our commercial regulations, to form a prudent estimate of the amount of capital employed by them, his calculations would turn out extremely erroneous, for besides the case with which regulations of this kind are eluded, many are merely nominal traders, and there are others whose mercantile existence is purely artificial for they are sustained in a temporary manner, by means of a forced species of circulation peculiar to this country. This consists in obtaining the acquiescence of the administrators of pious and charitable funds, let out at interest, to renew the bonds they hold during other successive risks, waiting, as it were, till some fatal tempest has swallowed up the vessel in which these merchants suppose their property to be embarked, and at once cancel all their obligations. On the other hand, neither excessive expenses nor the shipment of large quantities of goods to Acapulco can in any way be taken as a just criterion whereby to judge of the fortunes of individuals; because, in the first, there is great uniformity, every one, more or less, enjoying, exteriorly, the same easy circumstances, notwithstanding the disparity of real property; and in the second, considerable fiction prevails, many persons shipping under the same mark, and even when the shipper stands alone, he might have been provided with the necessary funds from the pious and charitable establishments, possibly without risking a dollar of his own in the whole operation. Under circumstances so dubious, far from presuming to give a decided opinion on the subject, I am compelled to judge from mere conjectures, and guided only by the knowledge and experience I have been able to acquire during my long residence there. In conformity thereto, I am inclined to believe, that the total amount of capital belonging to and employed in the trade of the Philippine Islands, does not at present exceed two and a half million dollars, with evident signs of rapid decline, if the merchants do not in time abandon the ruinous systems of chiefly carrying on their speculations with money obtained at interest.

[Large sums hoarded.] The two and a half million dollars thus attributed to the merchants, form, however, the smaller part of the funds distributed among the other classes, and the total amount of the circulating medium of the colony might be considered an object sufficiently worthy of being ascertained, owing to the great light it would throw on the present state of the inhabitants; but it is in vain to attempt any calculation of the kind, at least without the aid of data possessing a certain degree of accuracy. The only thing that can be affirmed is, that during the period of more than two hundred and fifty years which have elapsed since the conquest, the ingress of specie into the Philippine Islands has been constant. Their annual ships have seldom come from New Spain without bringing considerable sums in return, and if some of them have been lost, many others, without being confined to the one million of dollars constituting the ordinary amount of the permit, have not unfrequently come back with triple that sum; for which reason there are ample grounds of judging the estimates correct, which fix the total importation of dollars, during the whole of that long period of years, to be equal to four hundred millions. It may further be observed that, as in the Sangley mestizos economy and avarice compete with intelligence and activity in accumulating wealth and as they are scattered, among the principal islands, and in possession of the best lands and the most lucrative business of the interior, there are ample motives for presuming that these industrious and sagacious people have gradually, although incessantly, amassed immense sums in specie; but it would be impossible to point out their amount, distribution, or the secret places in which they are hoarded.

[Pious and charitable funds' capital.] The assemblage of pious legacies, temporalities, and other funds and property placed under the care of several administrative committees, for purposes as well religious as charitable, constitute the chief capital employed in external trade; and notwithstanding the failures, which from time to time occur, the subsequent accumulation of the enormous premiums obtained for funds laid out in maritime speculations, both in time of peace and war, not only suffices to make up all losses of the above kind, but also to secure the punctual payment of such charitable pensions and other charges as are to be deducted from the respective profits of this species of stock, its total amount, according to an official report made by order of the head committee of the sinking fund, including temporalities, and Queen Maria of Austria's endowment for the College of Las Marianas, together with other funds of the same kind, not comprehended in the decree of abolition, at the commencement of the year 1809, amounted to $2,470,390, and as the sea-risks of that and the following year were successful, and the outstanding amounts punctually recovered, the aggregate sum, arising out of the above description of property, may now be estimated at more than three millions. Of these funds three distributions are generally made, viz., one part is appropriated to the China risks, at from twelve to eighteen per cent. premium, according to circumstances, and also those to Madras, Calcutta and Batavia, at from sixteen to twenty-two per cent. The second, which generally is in the largest proportion, is employed in risks to Acapulco, at various premiums, from 27 to 45 per cent.; and the third is left in hand, as a kind of guarantee of the stability of the original endowments.

[Coveted by Spanish treasury.] In the great exigencies of the Royal Treasury, experienced during the last years of the administration of Sr. Soler, the royal decree of Consolidación was extended to the Philippine Islands, under the pretext of guarding the funds belonging to public charities and religious endowments ... sea-risks, the income of which, when secured on good mortgages, does not generally exceed five per cent, many in Spain not yielding above four; but the remarkable difference between this plan and the one above described, together with various and other weighty reasons alleged by the administrators, caused the dreaded effect of this new regulation to be suspended, and whilst the head committee of Manila were consulting their doubts and requesting fresh instructions from the court at home, orders came out not to make any alteration in measures relating to this description of property.

[Easy capital but lessened profits.] Accustomed, in their limited calculations, to identify the resources, offered by the funds belonging to this class of establishments, with the very existence of the colony, the needy merchants easily confound their personal with the general interest; and few stop to consider that the identical means of carrying on trade, without any capital of their own, although they have accidentally enriched a small number of persons, eventually have absorbed the principal profits, and possibly been the chief cause of the unflourishing state of the colony at large. Without fearing the charge of rashness, it may, in fact, be asserted, that if these charities and pious endowments had never existed, public prosperity in the Philippine Islands would, as in other parts, have been the immediate effect of the united efforts of the individual members of the community and of the experience acquired in the constant prosecution of the same object. As, however, a progress of this kind, although certain, must necessarily have been at first extremely slow, and as, on the other hand, the preference given to mercantile operations undertaken with the funds belonging to public charities, has its origin in the assemblage of vices so remarkable in the very organization of the body of Philippine merchants, any new measure on this subject might be deemed inconsistent, that at once deprived them of the use of resources on which they had been accustomed to rely, without removing those other defects which excuse, if not encourage, the continuation of the present system. Without, therefore, appealing to violent remedies, it is to be hoped that, in order to render plans of reform effectual, it will be sufficient, under more propitious circumstances, to see property brought from other countries to these Islands, as well as persons coming to settle in them, capable of managing it with that intelligence and economy required by trade. The competition of those who speculate at random would then cease, or what is the same, as money obtained at a premium could not then be laid out with the same advantages by the merchants as if it was their own, it will be necessary to renounce the fallacious profits held out by the public charities, till at least they are placed on a level with existing circumstances, and brought in to be of real service to the honorable planter and laborious merchant, in their accidental exigencies, ceasing to be, as hitherto, the indirect cause of idleness, dissipation, and the ruin of an infinite number of families.

[Mercantile shipping.] The vessels which the district magistrates of the provinces employ in carrying on their trade with the capital and those belonging to some of the richer merchants, together with such as are owned by the natives and mestizos, on an approximate calculation, amount to twelve thousand tons, including ships, brigs, schooners, galleys, barges, etc. For the want of better data, this estimate is founded only on reasonable conjecture, aided by the advice of experienced persons, for although the greatest part of these vessels are built by the natives in the neighborhood of their own towns, no register is kept of their number and dimensions, nor do they carry with them the usual certificates. Those belonging to the merchants, that is, ships and brigs of a certain size, have already begun to frequent the ports of China, Java, the coast of Coromandel, Bengal, and the Isle of France, availing themselves of the lucrative freights which formerly enriched and encouraged foreign shipping. The other class of vessels, although perfectly adequate to the coasting trade, cannot in general be applied to larger enterprises, on account of their not being sufficiently strong and capacious. The seamen are not apprenticed, or as it is usually called, matriculated, but their frequent crossing from island to island, their familiarity with regional tempests, voyages to various parts of America, and the occupation of fishing followed by the inhabitants of the coast, serve to train up a large body of dexterous and able mariners who at all times can be had, without any compulsion, to complete the crews.

[Need of nautical school.] The want of a public school for the teaching of navigation, is, however, sensibly felt, as well as great inconvenience from the scarcity of persons capable of being trusted with the command of vessels, and the ignorance that prevails of the waters of this dangerous Archipelago. Repeated royal orders have been sent over for the board of trade to proceed to the institution of so useful an establishment, and in the meantime, a medium has been resorted to in order to supply the deficiency, by allowing the free admission of foreign mates, provided they exhibit proofs of their acquaintance with navigation, and profess the Catholic worship. Shipowners nevertheless experience great difficulties, particularly at times when the Acapulco ship is fitting out, for although she is considered as a vessel of war, and commanded by officers of the royal navy, the plan of her equipment is so singular, that in addition, she requires the extra aid of one chief mate, and three under ones.

[Royal Phillipine company.] The various modifications this corporate body has successively experienced, have, in great measure, changed the essence of its original constitution, and the remonstrances of its directors, founded on the experience of a long series of years, at length induced the government at home to sanction alterations dictated by existing circumstances. The project of raising these Islands from the neglected state in which they were, and in some measure to place them in contact with the mother country, accompanied by a wish to give a new and great impulse to the various branches of industry which constitute the importance of a colony, could not have been more laudable; but, as was afterwards seen, the instrument employed was not adequate to the object in view. At the same time that the company were charged to promote, and, by means of their funds, to vivify the agriculture and industry of these provinces, the necessary powers and facilities to enable them to reap the fruits of their sacrifices were withheld. The protection granted to this establishment, did not go beyond a general recommendation in favor of its enterprises, and, in short, far from enjoying the exclusive preponderance obtained at their commencement by all the other Asiatic companies, that of the Philippine Islands labored under particular disadvantages.

[Local progress under adverse conditions.] Notwithstanding an organization so imperfect, scarcely had the agents of the new Company arrived at Manila, when they distributed through the country their numerous dependents, commissioned to encourage the natives by advances of money. They established subaltern factories in the Provinces of Ilocos, Bataan, Cavite, and Camarines; purchased lands; delivered out agricultural implements; founded manufacturies of cotton cloths; contracted for the crops of produce at very high prices; offered rewards and, in short, they put in motion every partial resources they were able to avail themselves of and their limited means allowed. It would be extremely easy for me, in this place, to enter a particular enumeration of the important services of this kind rendered by the company, and to exhibit, in the most evident point of view, the advantages thence derived to these Islands, if, besides being slightly touched upon in the preceding articles, this task had not been already ably performed by the Factor Don Juan Francisco Urroz, in his accurate report on this subject, addressed to the governing committee of the company, in 1803. In justice I will nevertheless observe, that this establishment, anxiously resolved to attain the end proposed, in spite of so many obstacles, constantly followed up its expensive system without being disheartened; nor did the contrarieties with which the Royal Audiencia, or High Court of Justice, frequently paralyzed its plans, the indifference of the governors, or the general opposition and jealousy of the other classes, in any way tend to relax its efforts, till at length, convinced of the impossibility of successfully contending, alone and without any other arms than its own reduced capital; and, on the other hand, well aware that a political body of this kind in vain seeks to unite within itself the triple and opposite characters of agriculturalist, manufacturer, and merchant, a determination was taken to alter the plan, and withdraw the factories established in the provinces, and by adopting a rigid economy and confining the operations in future to the purchase of such produce and manufactured articles as suited their trade, and were voluntarily brought by the natives to their stores, the expenses of the Company were curtailed, and a plan of reform introduced into all their speculations. By this means also they always secured an advantageous vent for the productions of the country, after having been the chief spring by which agriculture was promoted and encouraged in a direct manner.

[Handicapped in outside trade] The most beneficial reform, however, introduced by this establishment into its system, has, in reality, been derived from the variation or rather correction of its plans and enterprises, purely maritime. The government being desirous to increase the relations of this colony by every possible means, and to convert it into a common center of all the operations of the new company, at first required of the agents that the purchases and collection of goods from the coast of Coromandel, Bengal, and China, destined for Spain, should take place at Manila, either by purchasing the articles in that market, or through the medium of previous contracts to deliver them there. From this it is easy to infer, that the company was infallibly exposed to the harsh terms the respective contractors sought to impose upon them, as well with regard to prices as qualities, unless, in many cases, they preferred being left without the necessary assortments. Hence may it, without the smallest exaggeration, be affirmed, that, summing up all the surcharges under which the shipments left the port of Manila, and comparing them with those which might have been sent direct from the above-mentioned points, and without so extraordinary a détour as the one prescribed by law, the difference that followed in the prime cost of the cargos was not less than 80 per cent. The urgent manner, however, in which the directors of the company did not cease to deplore and complain of so evident a hardship, at length had the desired effect, and after existing ten or twelve years, so preposterous a system was successfully overthrown, and permission obtained from the king for the establishment of Spanish factories in the neighborhood of the China and India manufactures, as well as the power of addressing shipments direct to those foreign dominions. The enlightened policy of their respective governments did not allow them to hesitate in giving a favorable reception to our factors and vessels, and the purchases and shipments of Asiatic goods being thus realized without the old obstructions, the Company was reasonably led to hope being able soon to increase its operations, and progressively present more satisfactory results to the shareholders, when those political convulsions succeeding soon after, which have unhinged or destroyed all the ordinary relations of trade, compelled them to abandon their hopes, till the wished-for calm should be again restored.

[Temporary expedient of 1803.] In consequence of the new character and route given to the commercial enterprises of the Company, as authorized by a royal decree of July 12, 1803, the functions of the Manila factors were reduced to the annual shipment of a cargo of Asiatic goods to Peru, valued at $500,000, but only as long as the war lasted, and till the expiration of the extraordinary permits granted through the goodness of the king, and also to the transmitting to China and Bengal of the specie brought from America, and the collecting of certain quantities of indigo, sugar, or other produce of the Islands, with a view to gain by reselling it in the same market. Consequently, the moment things return to their pacific and ordinary course, will be the period when the necessity of the future existence of this establishment will cease, or at least, when the propriety will be evident of its reform or assimilation to the other commission houses, carrying on trade in Vera Cruz, Mexico, etc., which, not being hired establishments, do not create expenses when they cease to transact business.

[Competition of foreign merchants.] Against a measure of this kind it would be useless to allege, that, "by the exclusive privilege to introduce spirits and European effects into the colony, the Company has contracted the obligation of always keeping it properly supplied; that their very institution had for the basis the general improvement of the Islands, and in order duly to comply with these duties, it becomes indispensably necessary to keep up the present expensive establishment;" for, in the first place, in order, to render it incumbent on the company to introduce an indefinite quantity of European articles, it previously would be necessary to provide a vent for them, and this can never be the case, unless the exclusion of all competitors in the market is rigorously carried into effect. As things now are, the North Americans, English, French, and every other nation that wishes, openly usurped this privilege, by constantly inundating the Islands with spirits and all kinds of effects, and it is very evident that this same abuse which authorizes the infraction of the above privilege, if in that light it could in any way be considered, totally exonerates the company from all obligations by them contracted under a different understanding. Besides, the circumstances which have taken place since the publication of the royal decree, creating the above establishment into a corporate body, in the year 1785, have entirely changed the order established in this respect. In the first place, the port of Manila has been opened to foreign nations, in consequence of the disinterested representations of the company itself, and for the direct advantage of general trade; nor was it necessary to prevent our new guests from abusing the facilities thus granted to them, and much less to confine them to the mere introduction of Asiatic goods, the original plea made use of. In the second, as soon as the inhabitants of the Philippine Islands became familiar with the more useful and elegant objects of convenience and luxury, which they were enabled to purchase from foreigners, at reasonable prices, it was natural for them to pay little regard to the superfluous aid of the company, more particularly when the latter were no longer able to sustain the competition, either in the sale or supply of a multitude of articles, which, thanks to our own national simplicity, are scarcely known in Spain, whence their outward-bound cargoes are divided. Hence it follows that, far from the importation and supplies of the company being missed, it may with great reason be presumed, that this formal renunciation of this ideal privilege of theirs, must rather have contributed to secure, in a permanent manner, adequate supplies for all the wants and whims of the inhabitants of the colony; and that the publicity of such a determination would act as a fresh allurement successively to bring to the port of Manila a host of foreign speculators, anxious to avail themselves of a fresh opening for commercial pursuits.

[Company not a philanthropy.] The other objection, founded on the mistaken notion of its being inherent in, and belonging to, the very essence of the company, to promote the general improvement of the Philippine Islands, if well considered, will appear equally unjust. It is, in fact, a ridiculous, although too generally received, a prejudice to suppose, that the founders of this establishment proposed to themselves the plan of sinking the money of the shareholders in clearing the lands, and perfecting the rude manufactures of these distant Islands. To imagine this to have been one of the principal objects of the institution, or to suppose that, on this hard condition, their various privileges and exemptions were granted to them, is so far from the reality of the fact, that it would only be necessary to read with attention the 26th article of the quoted royal decree of creation, in order more correctly to comprehend the origin and constitutive system of this political body.

"The latter," says the Duke de Almodovar, "is reduced to two principal points: the first of which is the carrying of the trade of Asia with that of America and Europe; and the second, the encouragement and improvement of the productions and manufacturing industry of the Islands. The one is the essential attribute of the company, constituting its real character of a mercantile society; and, in the other respect, it becomes an auxiliary of the government, to whom the duties alluded to more immediately belong." If to the above we add the preamble of the 43rd article of the new decree of 1803, the recommendation, made to the company, to contribute to the prosperity of the agriculture and manufacturing industry of the Islands, will appear as a limited and secondary consideration; for even if the question were carried to extremes, it could never extend to any more than the application of four per cent of the annual profits of the company indistinctly to both branches. If, however, any doubts still remained, the explanation or solution recently given to this question would certainly remove them; because, by the simple fact of its being expressed in the latter part of the aforesaid 43rd article, [Profit percent to go to Spain.] "That the above-mentioned four per cent was to be laid out, with the king's approbation, in behalf of the agriculture and manufacturing industry of Spain and the Philippine Islands," it is clear that the king reserves and appropriates to himself the investment of the amount to be deducted from the general dividends, in order to apply it where and how may be deemed most advisable. Consequently, far from considering the company in that respect under an obligation to contribute to the improvement of the Philippines exclusively, the only thing that can be required of them, when their charter is withdrawn, is, the repayment to the royal treasury of the four per cent on their profits, for a purpose so vaguely defined. In following up this same train of argument, it would seem that, in order to render the amount to be deducted from the eventual profits of the company, in the course of time, a productive capital in the hands of the sovereign, the funds of the society not only ought not to be diverted to the continuation of projects which consume them, but, on the contrary, it is necessary to place at their disposal the direct means by which these funds can be increased, in order to make up to the company in some measure the enormous losses experienced of late years, and at once free their commerce from the shackles with which it has hitherto been obstructed.

[Need of special privileges] Finally, after twenty-four years of impotent and gratuitous efforts in the Philippines, and of the most obstinate opposition on the part of their rivals, it is now time for the company, by giving up the ungrateful struggle, to reform in every respect their expensive establishment in Manila, and to direct their principal endeavors to carry into effect the project so imperfectly traced out in the new decree of 1803. The opinion of the most vehement enemies of the privileged bodies tacitly approves this exception in their favor. Adam Smith, avowedly hostile to all monopolies, feels himself compelled to confess that, "without the incentives which exclusive companies offer to the individuals of a nation carrying on little trade, possibly their confined capitals would cease to be destined to the remote and uncertain enterprises which constitute a commerce with the East Indies."

[Spanish commerce in its infancy.] Our commerce, compared with that of other nations, notwithstanding what may be said on this subject, is most assuredly yet in a state of infancy. That with Asia, more especially, with the exception of the Royal Company, is almost unknown to all other classes. If it is, therefore, wished to exclude our many rivals from so lucrative a branch of trade as that which constitutes supplies for the consumption of the Peninsula and its dependencies, the means are obvious. The most material fact is in fact already done. The navigation to the various ports of Asia is familiar to the company's navy; their factors and clerks have acquired a practical knowledge of that species of trade, essential to the undertaking, as well as such information as was at first unknown; but, after the great misfortune this body has experienced, it will be indispensably necessary to aid and invigorate them with large supplies of money, following the example of other governments in similar cases; in order that the successful issue of their future operations may compensate their past losses, and worthily correspond with the magnitude of the object.

[Philippines a burden to Spain.] This Asiatic colony, although considered as conferring great lustre on the crown and name of our monarch, by exhibiting the vast extent of the limits of his dominions, has in reality been, during a long series of years, a true burden to the government, or at least, a possession whose chief advantages have redounded in favor of other powers, rivals of our maritime importance. Notwithstanding all that has been said on the score of real utility, certain it is, that the Philippine establishment has cost the treasury large sums of money; although, within the last twenty-five or thirty years, it must be confessed that the public revenues has experienced a considerable increase, and, of itself, has become an object of some consequence to the state.

[Profit from tobacco monopoly and foreign trade.] Among the various causes which have contributed to produce so favorable an alteration, the chief one have been the establishment of the tobacco monopoly, on behalf of the crown, and the opening of the port of Manila to the flag of other nations, at peace with Spain. The first has considerably increased the entries into the public treasury, and the second has tended to multiply the general mass of mercantile operations, independent of the other beneficial effects this last measure must have produced in a country, whose resources, trade and consumption had, from the time of the conquest, experienced the fatal shackles imposed by jealousy and ignorance.

[Improvement in public finances.] The improved aspect the colony soon assumed, by the introduction of this new system, as was natural, awakened the attention of ministers, and induced them more easily to consent to the measures subsequently proposed to them, principally intended to place those distant dominions on a footing of permanent security, so as to enable them to repel any fresh attempts on the part of an enemy. As, however, the productions of the country increased, the public expenses also became greater, although always in a much smaller proportion, with the exception of the interval between the years 1797 and 1802, when the government, fearful of a second invasion, was compelled, at its own expense, to provide against the danger with which these Islands were then threatened. If, therefore, as appears from the official reports of the treasurer-general, Larzabal, in my possession, the receipts at the treasury, in 1780, amounted only to $700,000 including the situado, or annual allowance for the expenses of government sent from New Spain, and after the ordinary charges of administration had been paid, a surplus of $170,000 remained in the hands of the treasurer; at present we have the satisfaction to find that the revenue is equal to $2,625,176.50 and the expenses do not exceed $2,179,731.87 by which means an annual surplus of $445,444.62 is left, applicable to the payment of the debt contracted during the extraordinary period above mentioned, now reduced to about $900,000 and afterwards transferable to the general funds belonging to the crown.

[Economy over Spanish-American colonial administration.] With regard to the administrative system, it is in every respect similar to the one observed in our governments of America, with this difference only, that, in the Philippine Islands, greater economy prevails in salaries, as well as in the number of persons employed. In former times, the establishment of intendencies, or boards of administration, was deemed expedient in Manila, Ilocos, Camarines, Iloilo, and Cebu; but they were soon afterwards reformed, or rather laid aside, on account of their being deemed superfluous. I would venture to state the grounds on which this opinion was then formed; but, as the sphere in which the king's revenue acts in these Islands increases and extends, which naturally will be the case if the plans and improvements dictated by the present favorable circumstances are carried into effect, I do not hesitate to say that it will be necessary again to appeal to the establishment of a greater number of boards for the management and collection of the various branches of the revenue, whether they are called intendencies, or by any other name; as it will be extremely difficult for the administration to do its duty, on the confined and inadequate plan under which it is at present organized.

[Fiscal system.] Under its existing form, it is constituted in the following manner: The governor of the Islands, in his quality of superintendent or administrator general, and as uniting in himself the powers of intendent of the army, presides at the board of administration of the king's revenue, which is placed in the immediate charge of a treasurer and two clerks. The principal branches have their respective general directors, on whom the provincial administrators depend, and the civil magistrates, in the quality of sub-delegates, collect within their respective districts, the tributes paid by the natives in money and produce, and manage everything else relating to the king's revenue. In ordinary cases, the general laws of the Indies govern, and especially are the ordinances or regulations of the Intendents of New Spain (Mexico) ordered to be observed in the Philippines. It ought further to be observed, that, in these Islands, the same as in all the vice-royalties and governments of America, there is a distinct body of royal decrees in force, which, in themselves, constitute a code of considerable size.

[Opposition to tobacco monopoly.] The process of converting the consumption of tobacco into a monopoly met with a most obstinate resistance on the part of the inhabitants, and the greatest circumspection and constancy were necessary for the governor, Don José Basco, to carry this arduous enterprise into effect. Accustomed to the cultivation of this plant without any restriction whatever, and habituated to its use from their infancy, it appeared to the people the extreme of rashness to seek simultaneously to extirpate it from the face of the greatest part of the Island of Luzon, in order to confine its culture within the narrow limits of a particular district. They were equally revolted at the idea of giving to a common article a high and arbitrary value, when, besides, it had become one of the first necessity. Every circumstance, however, being dispassionately considered, and the principle once admitted that it was expedient for the colony to maintain itself by means the least burdensome to the inhabitants, it certainly must be acknowledged that, although odious on account of its novelty and defective in the mode of its execution, a resource more productive and at the same time less injurious, could not have been devised. Hence was it that the partisans of the opposite system were strangely misled, by founding their calculation on false data, when they alleged that a substitute, equivalent to the increased revenue supposed to arise out of the monopoly of tobacco, might have been resorted to by ordering a proportionate rise in the branch of tributes. In fact, no one who had the least experience in matters of this kind, can be ignorant of the open repugnance the natives have always evinced to the payment of the ordinary head-tax (cedula), and the broils to which its collection has given rise. Besides, if well examined, no theory is more defective and more oppressive on account of the disparity with which it operates, than this same wrongly-boasted impost; for, however desirous it may be to simplify the method of collecting the general revenue of a state, if the best plan is to be adopted, that is, if public burdens are to be rendered the least obnoxious, it is necessary preferably to embrace the system of indirect contribution, in which class, to a certain degree, the monopoly of all those articles may be considered as included which are not rigorously of the first necessity, and only compel the individual to contribute when his own will induce him to become a consumer.

[Doubling of insular revenue thru tobacco.] Let this be as it may, certain it is, that to Governor Basco we are indebted for having doubled the annual amount of the revenue of these Islands, by merely rendering the consumption of tobacco subservient to the wants of the crown. It was he who placed these Islands in the comfortable situation of being able to subsist without being dependent on external supplies of money to meet the exigencies of government. It ought, however, to be remarked that, although they have been in the habit of receiving the annual allowance of $250,000 for which a standing credit was opened by the government at home on the general treasury of New Spain, considerable sums have, nevertheless, on various occasions, been remitted from the Philippines to Spain, through the channel of the Captain-General. * * * If these remittances have been suspended for some years past, it has evidently been owing to the imperious necessity of applying the ordinary proceeds of the revenue, as well as other extraordinary means, to unforeseen contingencies arising out of peculiar circumstances.

[Tobacco belt.] The planting and cultivation of tobacco are now confined to the district of Gapan, in Pampanga Province, to that of Cagayan, and to the small Island of Marinduque. The amount of the crops raised in the above three points and sold to the king, may, on an average, be estimated at fifty thousand bales, grown in the following proportion: Gapan, forty-seven thousand bales; Cagayan, two thousand, and Marinduque, one thousand. This stock, resold at the monopoly prices, yields a sum equal to about one million of dollars, and deducting therefrom the prime cost and all other expenses, legally chargeable on this branch, the net proceeds in favor of the revenue amount to $550,000 or upwards of one hundred twenty-two per cent. This profit is so much more secure, as it rests on the positive fact that, however great the quantity of the article sold furtively and by evading the vigilance of the guards, as the demand and consumption are excessive and always exceed the stock on hand, a ready sale cannot fail to be had for all the stock placed in the hands of the agents of the monopoly. From this it may also be inferred how much the net proceeds of this branch would be increased, if without venturing too far in extending the plantations and consequent purchases, care was taken to render the supplies more proportionate to the consumption; for, by a clear profit of one hundred twenty-two per cent, falling on a larger capital, it follows that a corresponding result would be obtained. In a word, the sales, far from declining or being in any way deemed precarious, are susceptible of a great increase, consequently this branch of revenue merits the serious attention of government beyond all others.