Chapter VIII: Conclusion (2)

[Exact and circumstantial information is of course, necessary for the guidance of the home government in all measures relating to the resources, needs, development, and administration of the islands, and annual reports on all these matters are demanded from governors and intendants by the laws of the Indias. Essential as this requirement is, it has always been neglected.] What those officials sometimes write, when questioned about these matters, are but generalities; their reports and information are reduced to how much has been produced and how much spent, in the résumé of the royal exchequer accounts. Thus it is not known with what necessity and justice certain extraordinary expenses have been incurred, what number of employees the king has in that colony, what causes have occasioned the increase or decrease in the product of the revenues, and, finally, how the means and resources of the people who contribute to the royal income can be augmented so that the latter can likewise be increased, all which the government ought to know. [It is true that the governors are laden with multifarious routine duties, which often prevent them from attending to these important matters, and from examining conditions personally, for which they have to depend upon the reports of their subordinates; and these are apt to be actuated by self-interest and they do not like reforms, so their statements are not very reliable. The reports made by the municipalities, commercial consulate, and other bodies are of the same sort, as being always from the standpoint of their corporation; and neither authorities nor corporations have the same stimulus to thoroughness, accuracy, and energy as has the private person who undertakes an enterprise. It is through the latter class that great projects and advances are made, but such persons hesitate to present plans for these to the authorities there, because the authorities do not examine them personally, "but by means of a contentious, voluminous, and annoying expediente," and likewise have no authority to adopt these plans until they are referred to Madrid--where, too, they are not encouraged to bring such projects before the royal government, and these, moreover, would have to be sent to Manila first (apparently to contend there with the aforesaid expediente). Bernaldez continues:] In order, then, to awaken this interest of enterprising private persons in the agriculture, manufactures, and commerce of Filipinas, it is necessary to have there a body expressly devoted to this object, and authorized to adopt provisionally any plan for improvement and progress which may be proposed to it and examined by it with the aid of its special knowledge of the country; and this body ought to be the superior council of the royal exchequer of the islands.... This council, as such, has very little occupation; its ministers, like all who are employed in Filipinas, attend to their official duties only in the forenoons, remaining free during all the afternoons and evenings for employment in a service of so great importance as this.

I am, then, of opinion that his Majesty should deign to establish the following: That the superior council of the royal exchequer in Filipinas constitute a similar council for the improvement and prosperity of the country, with the object of stimulating in every way the Indians to work, and capitalists to undertake enterprises. That its members hold weekly meetings for this purpose, at such hours as the president shall designate. That it also call in the proprietors of lands, agriculturists, manufacturers, and merchants of the country, listen to their views, and encourage them to propose reforms and plans for promoting the useful arts. That it be authorized to decide upon the execution of projects, provisionally, until the approbation of his Majesty is secured, in all matters which do not occasion loss to the country or injure the interests of the treasury. That it can draw upon the treasury of the community for a moderate amount of necessary expenses for the encouragement and reward of enterprises, for anything which can bring a positive and general benefit to the Indians and the government.

Of the royal court

[Our writer notes the requirement of the laws of the Indias that the governors and audiencias should consult and act together in matters of government, and the excellent results of this procedure. [146]] But unfortunately such has not been the case in the recent governments of Filipinas. The governor-presidents have entirely separated themselves from their audiencias, and have governed alone--sometimes in military fashion, not heeding the opinions and customs of the country, but depending on force of arms; and sometimes only by the advice of the lawyer who assists the governor, who has the title of government counselor [asesor], and who, although he ought to limit himself to giving opinion on points and cases regarding statutes, is counselor in all the arduous matters of administration. From this it has resulted that the fate of the colonies may be left in the hands of this class of counselors, and that their subordinates have had so much power and importance. [Moreover, this course leads to dissensions and hostilities between the governor and the Audiencia, which is a bad example to furnish to the people and lowers their respect for the authorities.] It must be borne in mind that the Indians of Filipinas are not so sunken in ignorance that they do not of themselves, and likewise through their attorneys and confessors, recognize that they have a sovereign who rules them, and who to this end has given them laws; consequently, all lack of concord among the authorities, and every change introduced in the method of governing the villages, must produce fatal consequences. [It is therefore recommended that the governor consult the Audiencia in all matters of the internal government of the islands, and any failure in this should be made a charge in his residencia.]

Of the administration of justice in general

The consideration and respect which the Audiencia of Manila merits among the Indians proceeds also from those times in which its members made official visits to the provinces, and in these visits did so much good to the villages. The visiting auditors were, in reality, friendly mediators in the disputes between the Indians; and they made agreements, placed limits to the villages, furnished a sort of municipal ordinance, and protected the natives against the oppressions of the alcaldes-mayor. Notwithstanding my high opinion of that tribunal, I regard as very proper the provisions of law xxxiv, título ii, book ii of the laws of the Indias in regard to the removal and promotion of its ministers, basing my opinion on the same arguments as did the law--that is, that it is very desirable not only to reward them, but to uproot them from the friendships which they contract in places where they remain a long time. These friendships, whose influence is always detrimental to the equitable administration of justice, are in Manila an almost necessary result of the small Spanish population, of the lack of all public amusement or diversion, and of the fact that with the enervating effect of the climate the rectitude and vigor of European morals is lost after some years of residence in the country. [The Audiencia has been unable to attend to the administration of justice in the islands as it has desired, for it has always been hindered by the many obstacles which arise from the storms, the lack of roads and mail service, the attraction of all the lawyers in the islands to the capital, the ignorance of the gobernadorcillo and the alcalde of each other's language and of judicial procedures, the dilatory mode of carrying on these between the provinces and Manila, etc. "Thus it is very common that these lawsuits, besides being always full of defects, last three, four, or six years; and that in that long period either the delinquents take to flight, or the documents are lost." Even in the Audiencia itself there are many obstacles to its action. Its subordinate officials are Indian or mestizo lawyers, who often are neither competent nor qualified for their positions;] and that which most contributes to retard the despatch of business, and to maintain the offices of the court without any organization, is the unfitness of those who occupy the class or purchasable and renunciable offices. The court clerk, the special commissioners, and the attorneys know nothing else than how to obtain the greatest possible advantage from the purchase of their offices. Without any instruction in the obligations of those positions, because they cannot acquire it in that country, and incapable of carrying out even what the ministers themselves have the patience to teach them, those men are, notwithstanding, the only ones whom the ministers can choose for those offices, because they are likewise the only ones who can outbid others in the sale of them. These positions are also of little advantage, because in the immense extension of the military jurisdiction, among the wealthy persons of Filipinas, the tribunal of the War Department has drawn to itself all the civil causes of importance in the islands; and the Audiencia has been reduced to criminal causes, and the minor controversies over land among the Indians, for which reason it is impossible to have educated Europeans who will purchase those posts and serve in them. The consequence of this is that the offices of the Audiencia are in the utmost disorder; that they do not contain even the books of entry which the laws provide for, or registers, citations, or reports of cases; that in order to record a decree or an official report it is necessary for a minister to take upon himself the task of doing that; and, finally, that the administration of justice must necessarily be slow. [Bernaldez therefore recommends that the ministers of the Audiencia be promoted at least every ten years to other appointments; that the minor offices be no longer purchasable or renunciable, but filled directly by royal appointment, and given to suitable persons, with good salaries (which are specified); and that the government of the islands provide some expedient for raising money to pay the salary of an attorney-general in each province.]

Of the alcaldes-mayor and military governors of the provinces

[The office of alcalde-mayor and provincial governor involves the civil government and defense of the province, the administration of justice, and the collection of the taxes; but those who are appointed to it are usually only traders, in reality, and care more for the profits yielded by the trade that is permitted to them than for the obligations of their office. They are paid twenty-five hard dollars a month for salary, "and they pay to the treasury the same sum for the indulto [i.e., privilege], as it is called there, of trading," to which pursuit they devote all their time and energies during the term of their office.] A system of alcaldeships so anomalous and irregular nevertheless produced at the outset some benefits to the islands, because, by reason of the great lack of capitalists there, many products of the agriculture and industries of the provinces would have received no encouragement if the alcalde had not speculated in them for the sake of his own trade. It is also necessary to note that there are provinces with which, on account of their remoteness and the little advantage which they have for the coasting trade, there was hardly any other means of communication than the barks of the alcalde. But now, when the coasting trade has become so general, it is a necessity to abolish, in most of the provinces of the islands, that absurd system of trading alcaldes; and to appoint in their places corregidors, lawyers educated in España, with only a salary, and the charge of making collections for the royal revenue, with the right to the offices in the Audiencia there. This increase in expenditure should be covered by the duties which ought to be imposed on the coasting trade, which by this means remains free from all impediment. [Bernaldez urges that the provincial magistrates be carefully selected, for their knowledge, experience, discretion, and executive ability; and that they be men who will devote themselves to the proper administration of justice, the study of those regions hitherto unknown, plans of reform, and the encouragement of industry and commerce among the people--not forgetting to preserve friendly relations with the parish priests. He recommends that seventeen of the provinces in the islands of Luzon, Panay, and Cebú be divided into corregidorships, eight into those of the first class, and nine into those of the second, with specified salaries to each; that appointments to these posts be made for six years; and that corregidors of the first class be proposed by the Audiencia.]

Of the taxes

[At present, the tribute paid by the Indians should not be increased because so many of them would be distressed by any heavier tax; but this might be done later, when the class of large proprietors may have increased in numbers. The payment of this tax in kind is a source of loss, not only in the quantity and quality of the products paid in, but in the damage caused by transportation and storage; and in selling the products thus received by the government there is loss, because its agents are poor managers of such business, not having the shrewdness or the knowledge of the markets which enable private merchants to make their profits. The commutation of the payment from money to kind was only partly due to the influence of the alcaldes, who preferred it for the benefit of their own trading;] the cause which has rendered that commutation almost necessary and which operates directly to the prejudice of the Indian, is the lack of a colonial money peculiar to the Filipinas Islands, like that which the other possessions in Asia have (of the necessity of which I will speak in another chapter), in order to revive internal commerce and promote and facilitate the payment of taxes.

The indirect taxes by means of government monopolies in Filipinas are, in my opinion, those most suitable to the native disposition of inhabitants who, furnished most abundantly by the soil with all the income necessary for their support, convert the superfluous enjoyments of life into objects of prime necessity. It should be a firm principle of good government to protect and rectify the administration of these indirect taxes, especially those on tobacco and wine--not only because these will be sufficient to cover abundantly all the expenses of army and navy, but because in case of a war and the absolute cessation of trade the government will have this firm support for its existence; and therefore no hearing should be given to the suggestions and proposals of those persons who are craftily working to free the islands from those monopolies. But so long as these taxes are not made general through all the provinces of the archipelago, so that the fire of the contraband trade (which always finds lodgment in the exempt provinces) may be extinguished, and until certain reforms are adopted in their administration and protection, the produce [of these taxes] in favor of the royal exchequer must be very disproportionate to the amounts consumed by that large population.

Of the revenue from tobacco

The revenue which supports the Filipinas Islands, which cannot be replaced by any other, and which if it were properly established and administered would yield incalculable advantages, is that from tobacco. Three millions of inhabitants, all without exception of sex or age consumers of that article--and for each one of them, on the average, and at a very low estimate, can be set down a consumption of four pesos [worth] a year--would produce an addition to the revenue of twelve million pesos, which they would obtain from the land and from their industries, in order to give at the same time a great impulse to commerce. This is not a paradox, for the use of tobacco is of so prime necessity for the Indians that the same calculation can be made for that object that would be made for the use of bread in España. [Bernaldez considers the injurious effects of enforcing this monopoly in only a part of the islands--"although more than half the population is today subject to the monopoly, its income is only one-tenth of what, at a reasonable estimate, it ought to be"--and those of its careless and negligent administration. He makes the following suggestions:] That the collection of the tributes from the Indians of Filipinas be made compulsory in money, as soon as the colonial money can be placed in circulation in their provinces. That the monopoly of tobacco in Filipinas be extended to all the [now] exempt provinces, without exception; and the government there will succeed much better in establishing it therein by sagacity than by authority or force. That the examination and appraisal of the leaf tobacco which the monopoly purchases from the growers be made before a board which the government there shall appoint annually, composed of officials from the capital who are most trustworthy and intelligent in that branch of administration, such tobacco as proves to be unfit for use being burned in their presence. That all the tobacco which can be collected in Filipinas be conveyed to España, by means of contracts with private persons for the freighting of ships; and with it the amount which can be remitted from the [different] branches of the royal exchequer, and the annual surplus of their funds.

Of the revenue from wine

The product of the revenue from wine cannot in Filipinas be considered so important as that from tobacco, because the Indians are very moderate in their drinking. The wines made from the cocoanut and nipa (the only ones subject to the monopoly) are wholesome for the Indians; and as the monopoly has regulated the supply for each village, greatly improving the process of making the liquor and diminishing its strength, the Indians prefer the monopoly to the free privilege of this article. The failure of this revenue to increase depends on two causes: first, that the monopoly is not extended, as it ought to be, to all the provinces of the islands, not only thus to place all the natives on the same footing, and so suppress the contraband trade, but to prevent by this method the manufacture by the Indians of other beverages which are more injurious to their health, and which, without giving them pleasure, intoxicate them as has been the case with the brandy and rum from sugar-cane juice or molasses; second, the great amount of the two last-named liquors which is clandestinely furnished to the public, as a result of the permission, very negligently guarded, which was given to manufacture them freely to export abroad, or to sell them under a certain tax in order that they should not injure the consumption of the article placed under monopoly control. [Bernaldez admits that the manufacture of the above-mentioned brandy and rum ought to be allowed, "because otherwise the country would lose the enormous quantity of molasses which results from the sugar-making, which has a considerable value, but cannot be employed for other uses;" but the government ought to maintain the value of the monopolized beverages, and at the same time facilitate the exportation of rum and brandy. [147] He recommends, besides the extension of the wine monopoly:] That, as a consequence, every other kind of beverage made in the country be prohibited in the islands for the common use of the Indians. That the manufacture of brandy and rum from sugar-cane be allowed only for the export trade. That each manufacturer be likewise allowed to have a retail warehouse, under the imposts which they now pay. That the manufacturers be compelled to establish their factories in the immediate vicinity of Manila, where they can and must be watched, at their own expense, by the revenue clerks. That all the brandy and rum which is made from sugar be immediately deposited in warehouses, the keys of which the custom-house shall take charge of, the government levying on it moderate duties for deposit as well as for export. [148]

Of the head-money, or personal tax, from the Chinese

[The Chinese were at first allowed in Filipinas only to cultivate the soil and work in handicrafts; but they have drawn into their possession the control of trade and commerce, "winning the good-will of the government and the tolerance of the inhabitants of Manila with a thousand intrigues unknown in the country. They have done in Filipinas what the Europeans ought to have done, that is, to acquire wealth and send it, or themselves go with it, to their own country to establish commercial houses;" and thus they have added a marvelous amount to the wealth of China. Their method of doing business is explained--practically the same as is done in the United States at the present time; united capital and effort, division of the gains accordingly, quick sales and small profits, etc. They have obtained the exclusive retail trade in Manila, and a great part of the wholesale trade, "and thereby have aroused the hostility of corporations and private persons, notwithstanding that they are a class of peaceable and industrious people in the country." Bernaldez thinks that their tax of six pesos a year is much too small, considering the advantages which they enjoy and the large fortunes which they acquire in the islands; in Batavia the Chinese pay the government as much as thirty pesos a month for merely the permission to trade. The tax on them at Manila is farmed out to a Chinaman, and does not yield as much as it should. The following recommendations are made:] That measures be immediately taken to correct and render accurate the registration of the Chinese settled in Filipinas. That the individuals of that nation be divided into three classes: first, wholesale merchants, understanding by that term all those who embark for China and receive thence goods on commission or for their own account; second, retail merchants, or shopkeepers; third, artisans of every class. That these be distributed by groups under head-men [por cabecerias], which shall not exceed sixty individuals to each one. That every Chinaman, as soon as he is registered, shall be joined to one of these groups, the head-man becoming responsible for him. That these Chinese heads of barangay must give security for the tribute from those under them, and collect the tax and deliver it to the alcalde-mayor of their respective province, being responsible in every case for the residence and occupation of their tribute-payers; and for this commission collecting the three per cent. That in future the tax on the Chinese already settled and those who shall settle in Filipinas shall be as follows: the wholesale merchant, ten pesos fuertes a month; the retail merchant, four pesos ditto; the artisan of every class, two pesos ditto. That every Chinaman settled there shall be free to return to his own country, provided he is not married, the limit of six months being allowed for this. That the Chinaman, of whatever class, who shall not pay his respective tax within one year shall be sent and delivered up to one of the ranch-owners for compulsory labor [por repartimiento], in order that there he may work at the day-wages agreed upon, which must not fall below two reals a day and food-rations of rice; and that the ranchman shall with these wages pay the tax [due], at the rate of two pesos a month.

[Among the advantages derived from this arrangement will be that of sending out of the islands the many poor and useless Chinese who have been gradually multiplying there, and have been infecting the natives with their vices. It will even benefit the Chinese themselves, "who with two reals a day, which make 7 1/2 dollars a month clear" (thus showing that Sunday labor was exacted), "can pay two pesos of tax and be exceedingly prosperous."] [149]

Of the custom-house duties

The royal decree of August 25, 1818, by which it was decided that the exaction of import and export duties should be made in the Manila custom-house from the owners of the vessels, without considering the ownership of their lading, and that if the vessel were Spanish it should pay three per cent, and if foreign six per cent, has been a special favor or privilege granted to half a dozen Spanish ship-owners (for those who conduct the commerce with China and Bengala cannot be more than that number), with serious loss to the exchequer. This is, of course, annually deprived of the considerable income of the three per cent rebate on all foreign goods imported into Manila, which is a direct benefit to the foreigners who own nearly all the commerce in those goods. The manufacturers of Filipinas, especially those of cotton fabrics--which are able to compete with, and even exceed in cheapness, those of China, since the cotton of which these are made is of their own raising--are being ruined, because that rebate of duties brings the prices of the Chinese goods so near to those of their infant industry that the former ought always to be preferred; and, finally, the above arrangement has also given opportunity for various frauds proceeding from the pretended sale of foreign vessels to Spaniards, solely for the purpose of availing themselves of the rebate of duties on their cargoes, and to the possession (under assumed names) by Chinese settled in Manila of Spanish vessels.

[Bernaldez states the considerations which should regulate these duties, and the following recommendations for the payment of duties on various classes of merchandise, this amount to cover in each case the entire exaction: On national goods in transit, carried to Manila--on a Spanish vessel, three per cent; on a foreign ship, six per cent. The same goods for consumption in the country shall pay nine and ten per cent respectively. On foreign goods from India and China, for domestic consumption, ten and fifteen per cent respectively; from this class should be excepted the wines, brandies, pig iron, small articles of cast iron, dry beans, and foreign paper, which should pay twenty and twenty-five per cent respectively. Goods, whether national or foreign, not declared as in transit at leaving Manila shall pay two and four per cent respectively; but those registered on a Spanish ship from India, China, and all Asia for España, ten per cent. Coined silver and gold, and silver bullion, shall pay no entrance duty at Manila, but on leaving that port shall pay three and six per cent respectively; and foreign gold in bullion shall pay eight per cent at entering Manila (whether on Spanish or foreign vessels). National products, and those of the industries of Filipinas, shall pay when exported eight per cent on a foreign vessel, but nothing on a Spanish ship. The duty of the merchant's peso [peso marchante] which the municipality of Manila collects should be abolished as obstructive to commerce; for the legal origin of this imposition is unknown, and it is very unsuitable for a municipality which is rich through its rents, revenues, and imposts. Bernaldez believes that this tariff would promote agriculture, industry, and navigation, and benefit the royal treasury. More coin would be brought into the islands, the plan of exempting it from duties having been adopted for that purpose by all the other governments of Asia. The burden of these duties will fall mainly on the rich class, and not on the Indians. The "infant industries" [fabricas nacientes] will be protected, and the Spanish merchant marine will be given the advantage over the foreigners.]

Of the inter-island trade

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

Of money

The Spanish peso is the universal money in the commerce among all the nations of Asia; and, as therefore the exterior commerce is constantly drawing it into circulation, the governments of all the colonies in that part of the world have found themselves obliged to create a colonial money, which on account of its provisional value cannot be taken out of the country, and, being directed into the internal commerce of the province, feeds and multiplies exchanges. In Filipinas there was no need of adopting that measure while its commerce with Nueva España lasted, because then those islands were receiving annually a million of Mexican pesos, and the situado of two hundred and fifty thousand; and, besides this, the business that was carried on during that period in the natural and industrial products of the country was almost insignificant. And if in Filipinas at this present time enough money circulates to support the outside traffic, that results from the fact that the profits which the colony has gained from the commerce with all the nations of Europa (the balance of which is in favor of Filipinas) are greater than the losses of money which it experiences in its commerce with India and China. [This is of course a very precarious situation; for the contingencies of war, diversion of commerce from the islands, or poor crops may at any time compel Filipinas to send out all its money to India or China for the supply of its needed commodities; and this would ruin even the internal commerce, "on account of the serious difficulties which the establishment of a system of public credit there presents."] Besides that, considering now the matter of giving a strong impulse to the agriculture and industry of those islands, there would be needed for the former project many millions of pesos in constant circulation in the provinces, and there must be a great reversion of the capital employed in commerce to the interior of the islands; and this cannot be practiced in a country in which hardly enough money circulates to support the government and the demands from without, and which had undertaken to promote its interests by commerce before placing its agriculture and industry on a sound basis. In almost all the provinces of the islands very little money circulates, and in some of them there is not even what is necessary in order that the natives can pay the government taxes; and from this has proceeded the necessity of commuting the tribute from money to kind. The Spanish pesos go from and return to the provinces rapidly; and it can be said that the produce of the taxes which has to be sent annually to the capital, and the importations of the alcaldes and the mestizos, are equal. Most of the Indians trade among themselves by means of simple barter, and the mestizos make them pay dearly with their products for the money that they need for clothing themselves and paying their taxes.

There is, then, nothing to hope for--either advance in agriculture and the useful arts, or the great extension and progress of which the consumption of monopolized articles is susceptible--without the creation of a colonial money which will remain within the colony to which it belongs, which will liberate it from the precarious dependence on foreign commerce, which will afford to the Indian the just profits from his labor, which by remaining with him in the provinces will encourage him to obtain possession of it as an easy means of providing him with the necessities of life at the time [when he needs them,] and which likewise may be an allurement to his children--which up to a certain point it is of great importance to encourage in the Indians, as a powerful incentive to make them labor. [Lastly, this colonial money would check the exportation of silver coin by the Chinese, [150] who would then prefer to export from Filipinas its nature products in return for their commodities. In China all the Spanish pesos are, in order to keep them within the empire, disfigured with so many marks that they cannot be used in foreign commerce.] We have no knowledge thus far of there being silver mines in Filipinas; but it is a positive fact that gold abounds there, of so low grade and so mingled with silver that it has little more value than that metal. This circumstance, aided by the introduction of some silver bars from America, carried thither by foreigners, the recoinage of the half-dollars, and of the silver two-real, one-real, and half-real pieces which circulate in the islands, and the use of the great amount of old silver in household articles--which is there sold at very low prices, on account of being alloyed and manufactured in China--would supply the government with easy means for the creation of a colonial currency without need for expense, or for forestalling [the income from] any fund, only by accepting from the persons interested their respective materials in gold or silver, under assay, and returning to them the value of the metal in the coined money which it would yield, after deducting the necessary expenses. Likewise the government could accept, in payment of all taxes, the gold which is obtained from the placers, at the same prices at which the Chinese carry it away, and after it was assayed at its mint--where the learned professors who for this purpose would be sent from Europe would dictate the necessary measures for carrying into effect an undertaking which is the basis for all progress in the islands. I am therefore of opinion that his Majesty should deign to issue the following orders: That a colonial currency be immediately created for internal circulation in the Filipinas Islands. That for this purpose a mint be established there. That the standard for this money be the same as those of the moneys of the same kind which have been adopted in the other colonies of Asia. That the subdivisions of its value be made according to the needs of internal trade. That all the gold and silver, in various forms, which private persons offer for coinage be accepted at the mint, returning it to them in the standard coin which it yields after the expenses are deducted. That the government there be authorized to accept in payment of taxes the gold from the mines of Filipinas, after it is assayed. That regulations be drawn up by competent persons, in which precautions are taken against any fraud in this matter.

Of the charitable funds established in Filipinas

[The obras pías merit full attention from the government,] on account of the advantages which the agriculture and industry of the islands may gain from them. If the limited and privileged dealings of Manila with Nueva España had not been reduced to a merely passive commerce of transfer or transportation, those foundations would, at the same time while they have become wealthy, have given real opulence to that commerce. Of the enormous profit of two hundred and three hundred per cent which the transactions of the galleon yielded at Acapulco, the greater part was for the foreign dealers of India and China, whose wares supplied almost all the lading of the galleons, and for the obras pías; a greatly reduced profit remained for the Manila merchants, which could be shown by a calculation which might be made of the many millions imported from Nueva España by the galleons, and of the comparatively small value, in money or assistance, which has remained [therefrom] in the islands. [The returns from these funds are now greatly diminished, since the cessation of the Acapulco trade, for on that depended the commerce with India and China, which also has practically ended, save for the commodities from those countries which are consumed in Filipinas. This could not have been foreseen by the founders of those funds, many of which, moreover, are impeded by various restrictions and conditions; and the government should interpose its authority not only to secure the fulfilment of the founders' wishes, but to commute the investment of the funds in such a way that they may be used to promote the agriculture and industry of the country. These funds ought also to be preserved as a most useful resource in case of war or revolution, when the usual revenues of the government would cease. Bernaldez therefore recommends:] That the government of Manila furnish special protection to the charitable foundations of the islands, and keep close watch over their honest administration. That it stimulate the managers to obtain immediately from the competent authority the commutation of the allotments of these funds so as to benefit the agriculture and manufactures of the country, giving reports of what shall be effected in a matter so important for the welfare of the islands. That the funds in the communal treasuries of the Indians and the Chinese, those of the secular revenues, [151] and any others which are not subject to private foundations and regulations, and which hitherto have followed in their investments the rules of the obras pías, shall be by preference set aside for rewards bestowed for enterprises in agriculture, industry, and inter-island trade. Thus will be remedied the injury arising from the failure of those great funds to be in circulation; and the abuse of employing them in favor of foreigners and their commerce, under assumed names, will be corrected.

Of the arsenal of Cavite

[Bernaldez declares that the works of naval construction, etc., for the government can be accomplished for half the cost by means of private contracts awarded to the lowest bidder, which is proved by the history of all the enterprises which have been undertaken by the government in those islands, whether in agriculture, mining, or metal-working; "for, however great the disinterestedness and economy which can be ascribed to the officials who conduct the enterprise, in this direction nothing can take the place of the contractor's activity and vigilance." In the cutting and gathering of timber there is abundant cheating and graft, as that work is directed by Indian overseers, or by mestizos and Chinese; the latter have abandoned the system of day wages ("which the natural slothfulness of the Indian renders very costly"), and instead pay the natives so much for a certain amount of work (which they call paqueao). "In this way the Indians, who always are cheated in these calculations, have to redouble their efforts to gain the amount bargained for, thus allowing to the mestizo the benefit of at least one-third of the usual daily wages." After the timber is cut, its transportation, storage, and seasoning cost more when done by the government than by the mestizo contractor, and occasion much loss and damage. Ships of war could be built at Manila to great advantage, so far as the abundance and cheapness and location of the timber is concerned; but the lack of iron and copper there is a serious hindrance to such plans. There are mines of both metals in the islands, but they are not worked for lack of enterprising persons and suitable machinery. Bernaldez recommends: That the crown offer large rewards for the successful operation of the iron and copper mines in the islands, the supply therefrom of metal sufficient for the construction of ships and cannon, and the introduction of machinery for mining and iron-working. That arrangements be made for building war-ships each year, by contracts for the supply of timber and the manual labor. That competent engineers and constructors be sent from España, at good salaries; that necessary supplies and materials be secured by contracts, bid for in public; and that funds from the royal exchequer be set aside for this purpose to the amount of one hundred thousand to one hundred and fifty thousand pesos annually. That all the construction and repairing of war-ships for Filipinas be done through contracts, at public bidding; and that the arsenal of Cavite be reduced to a simple depository for the articles required for arming the ships, with such officials as may be necessary for the custody of these.]

Of the agriculture of the Filipinas Islands, in general, and of their principal productions

The Filipinas Islands, on account of the fertility of their land, their abundant rains, and the great number of animals for labor, constitute an agricultural colony; and to the readiness with which the country supplies the principal articles for human support has been due the rapid increase of its population. And although the Indians, as a general thing, only devote themselves to the cultivation of what they actually need for subsistence, the annual production so far exceeds the necessities of the people that very seldom has the failure or scarcity of provisions been experienced. The abundance of its arable lands and the excellence of its products have also rendered this colony capable of a considerable commerce with the other nations, at a much greater advantage over the other colonies, inasmuch as the land is tilled by free labor, which costs only the value of its food and clothing; and not by slaves, who, besides those expenses, occasion that of the premium or interest on the money invested in their purchase, which causes a difference of at least a third more in the cost of the manual labor employed in agriculture.

The neglected condition in which agriculture is in Filipinas, considered under this last aspect, and the backwardness in knowledge of the manipulations required in the preparation of its raw products for their consumption in trade, proceed from the following causes: (1) The lack of a stable and regular system of commerce which can assure to the inhabitants of the islands the annual exportation of the produce of an extensive agriculture. The foreign vessels resort to the ports there, some years in excessive number and others very infrequently; and this irregularity always produces an effect opposed to the interests of the colony. The extraordinary rise in prices--which during the last three years has reached a value double that from which the ability to sell at all times would enable the colony to gain a profit--and the consequent lack of commodities for supplying all the vessels, prevent them from returning in the following years; while the decline of prices below what is fair, caused by the non-arrival of ships, discourages large production in agriculture. The Indians are absolutely without capital and storehouses which would enable them to hold back their produce for another market. They are induced to cultivate the soil solely by their present advantage; they always sell, but they suffer from the stern law of trade which, although it flatters them in years of scarcity, equally tyrannizes over them in years of abundance--for they are always deceived regarding the actual prices of the general market, of which they are ignorant; and one year only of unsuccessful sales, whether from lack of foreign ships, or through the loss of their crops, will be a warning to them for a long time. In short, the agriculture of Filipinas at this time depends on the irregular and transient stimulus which is furnished to it by the peripatetic capital of the mestizo, who buys only in the years when he calculates that he must in view of the condition of the crops and the market, make a profit; while the Indian farmer always sows his seed heedless of results, and without the guidance of that elementary principle in affairs of commerce that the estimate of what he acquires ought to be based on a calculation of the market for it. For the corrective of this evil, and assuming that, for reasons that are rightful and conformable to sound policy (as I have set forth), the residence of foreigners in the islands ought not to be permitted, I find no other means than this, that the government encourage, by judicious measures, the direct and unlimited commerce of España with that colony--of which I shall speak in another chapter, [presenting] the rough sketch of a plan which ought to produce the following effects: (a) The definite and reliable annual exportation from those islands, not only of the great quantity of sugar, indigo, coffee, and other native products which are needed in the ordinary consumption of España, but of that which Spanish commerce can dispose of in the other nations and free ports of Europa. (b) The establishment of Spanish trading posts [factorias] in the interior of the provinces of Filipinas, which the Spanish mercantile interests will carry on for the sake of acquiring the agricultural produce at first hand, freeing the Indians from the oppressive rule of the mestizo trader, and forming contracts with them, at prices agreed upon, for a certain number of years.

[The backward condition of agriculture proceeds] (2) from the lack of great agricultural establishments. One of the causes for this is the fact that the capital of the islands, which ought to be employed for that object, has been diverted by the commerce of India, China, and Nueva España, which offers greater and quicker profits. The religious orders administer their estates as in mortmain, or by ecclesiastical rules. The Indians cultivate, not from inclination but through necessity, the little plots of ground on which they have fixed their abodes. They lack the buildings and appliances necessary for the preparation of the little sugar and indigo that they collect; and from that results the wretched and unreliable quality of those articles which so discredits them in the trade. They lack also the capital to incur the expenses of a regular plantation, and these enterprises require costly outlays at the start. But this cause of backwardness would be remedied by the impulse which would be given to commerce by the exportation of native products, which would attract to agriculture the capital which it has hitherto lacked, and by the special protection which the government can grant to large capitalists who may devote themselves to agriculture.

(3) From the ignorance of the Indians, not only of the various methods of making plantations, but of the means of preparing the raw materials for their employment in the trade--a cause which is so universal and so mischievous that the agricultural products of Filipinas, which ought to be, on account of their excellent character and the extent of territory of the islands, commodities which should supply all the markets of Europe and hold the first rank in quality, are the most scarce in general commerce, and moreover lowest in price, as I am going to prove by some instances. The sugar of Filipinas is today the most important commodity for exportation which the commerce there includes. The cultivation of the sugar-cane cannot be improved; but the manufacture of the sugar is so defective that, in spite of the superior quality of the cane, the sugar which is produced from it is inferior to that which is called terciado [i.e., brown] at Habana. Although in the market of Cadiz the white sugar from Habana is worth thirty-two to twenty-five silver reals, and the brown sugar twenty-six to twenty-eight, the white sugar of Manila is worth twenty-four to twenty-five [152]--that is, nine silver reals less than the former, and two or three reals less than the latter on each arroba. Consequently, the temporary privilege granted by his Majesty in exempting the products of Filipinas from duties is the only support of the expeditions which have come [thence] to the Peninsula; and it is unquestionable that when that privilege ceases that commerce will likewise come to a complete stop. For if from the twenty-four silver reals, the highest price at which an arroba of the Manila sugar can be sold, be deducted for duties eight reals and twenty-seven maravedís, the trader will receive a price of only nineteen silver reals, five cuartos; subtracting from this the fourteen and one-half reals of the prime cost at Manila (according to the latest information received), and the only profit left to him would be four reals, three maravedís--with which it is absolutely impossible for him to pay either the heavy freight charges on that commodity, or the interest on money and the insurance premiums, on a voyage three times as long as that from Habana. The low price [of sugar] in the market has no other cause than the lack of skill at Manila for manufacturing the sugar; this art is there found entirely in its infancy, and without any other method than that which, since very ancient times, the Chinese have taught them. [The sugar-makers have not proper machinery or appliances, or the knowledge, for any of the stages of the process; and their product is inferior, when it might be as good as that of Habana--or even better, if the same skill and care were used in making it as are used there. The above profit of nine reals on the arroba, if equally divided among the grower, the manufacturer, and the government (for duties which in that case should be imposed on the sugar), would yield each of them $300,000 annually, on the estimated production of 1,000,000 arrobas which would be practicable for Filipinas--to say nothing of the increased benefits to the laboring class--with improved methods of manufacture. To secure this, the government must be energetic in promoting large establishments there, and introducing machinery and skilled laborers. "The funds in the communal treasury of the Indians, which at the present time must reach about $300,000, and whose object is the benefit of those same Indians," might aid the government in meeting the expenses of such measures; the skilled artisans could instruct the Indian farmers in the new improved methods, and the industry would be almost perfected in two years' time, at very little expense. Bernaldez describes in similar manner the deficiencies, possibilities, and needs of the indigo, coffee, and cacao industries, and urges the government to extend like care to these; what has been done thus far by the colonial government has been quite ineffective, because it has been in the form of proclamations and enactments which merely required small plantations to be made by all the inhabitants, but these failed because they disregarded the principles of political economy and made no provision for the individual interest of the cultivator.] There are, then, two means which ought to be adopted for the promotion of large plantations in Filipinas, incentive and instruction; and for this it is necessary to grant pecuniary rewards to the agriculturists, and furnish them with teachers from the near-by islands of Java or even Bourbon, where not only coffee but cacao is cultivated.