Part 10
The method of dealing with the goods thus received was, to say the least, peculiar. They were done up each year in bales, always just fifteen hundred in number, and of exactly the same size and shape, for shipment to Mexico. From the first year after the formation of the colony until the year 1811, a fixed process was maintained. Every year a State-galleon left Manila for Mexico, bearing the baled Chinese goods, which represented the Philippine tribute. Every year the ship returned with a portion of the proceeds to the starting-point, this being known as the Mexican subsidy. One galleon and no more. For two centuries, and longer, this rigid system was kept up, the commerce of the islands being limited to this conveyance of tribute across the seas. Navidad was at first the Mexican port of call. Then Acapulco was chosen, and for more than two hundred years the State-galleon, Naos de Acapulco, yearly came and went across the Pacific, carrying tribute for Spain. The ships employed were very different from modern commercial craft. Short of length, wide of beam, and light of draught, with high elevation in bow and stern, above water they presented something of the outline of a crescent moon. They were of about 1,500 tons burden, had four decks, and were provided with guns; for, the waters they crossed were not secure from hostile craft, and Spain not infrequently had the loss of one of her rich galleons to mourn.
Thus it continued, until the rebellion in Mexico put an end to the traffic, the last of the treasure-galleons leaving for Mexico in 1811. The last for Manila set sail in 1815. There were other reasons than the war to put an end to the old traffic. The expense had become too great and the profit too small. Spain's finances had fallen into a lamentable state, and the Naos de Acapulco was, perforce, withdrawn. Needy politicians, who knew little about seamanship, but much about perquisites, had forced themselves into the galleon, whose commander received an annual salary of $40,000, the chief executive officer $25,000, and the quartermaster nine per cent. of the cargo, the total of which was no small sum.
It was an odd idea to restrict the commerce of a group of the richest islands of the tropic seas, to a single vessel carrying the annual tribute of the island. In fact, it was not quite so restricted. The tribute-cargo did not fill the ship. There was some space left, and the use of this was given to a few favored merchants, the Consulado, as they were called, a trading ring, each member of which must have resided a certain number of years in the Philippines, and have a fortune of at least $8,000. This surplus freight was regulated by the issue of boletas,--documents that long did duty as paper money, passing from hand to hand. The demand for space much exceeded the supply, and the right to ship on the annual galleon often went to favored hands, merchants being set aside by churchmen, officials, and others with grasping palms.
It may be that the idea of adding to the island-trade by supplying more ships, never penetrated the thick official cuticle of Spain. At all events, the single galleon sailed back and forth year after year, until the years lengthened into centuries, and while other nations were sending their deeply-freighted craft to all the ports of the earth. It was odd and lamentable to see this pitiful travesty of commercial enterprise kept up until after the dawn of the busy nineteenth century.
The yearly value of the official cargo sent from Manila was at first limited to $250,000. But such was the demand for the goods in Mexico, that one hundred per cent. was usually realized on the sales. The return-trade was not permitted to exceed the value of the proceeds,--$500,000, in coin or stores. In this way Mexican dollars, the recognized coin of the colony, made their way thither in large quantities. They were largely absorbed by China, where they were highly welcome. A certain sum was necessary to maintain the colony. This--the royal subsidy (Real Situado)--was fixed by decree from time to time, coming out of the proceeds of the annual tribute.
In saying that the annual galleon conveyed all the commerce of the Philippines, I should have confined this statement to Western trade. There was some commerce with the East. Indian and Persian goods reached Manila in considerable quantities. The same was the case, as I have stated, with Chinese wares. But the absurd restrictions of Spain hampered this trade. No Spaniard was permitted to go to China to buy his own goods. He must wait for the Chinese junks, and content himself with what they chose to bring.
The sailing of the annual galleon took place usually in July; and the voyage occupied about five months. The route to be followed was strictly laid down, and even the vagaries of the winds were scarcely an excuse for deviating from it. As has been said, all was carefully arranged as to size and number of bales and weight of cargo. For a century and a half there was practically no competition in this trade, and everything could be officially regulated, even to the selling-price of the goods in the Mexican market. The departure and arrival of the galleon at Manila formed the great events of the year. At these single dates the bars of exclusion were thrown down,--goods left, and wealth returned to, the colony; new faces appeared, and rejoicing was general. Te Deums were chanted in the churches, musicians paraded the streets, filling the air with melody, and bunting by day and illumination by night testified to the public joy.
Life was an easy affair with the merchants of Manila. Business was never a distressing occupation. One or two days in each week were Saint's days--to be strictly kept. While the galleon was away, there was little to do except to await the Chinese junks and prepare the bales for shipment. There was no rise or fall of market-price, no need of smartness, tact, or enterprise, and only three months in the year when active labor was needed. During the remaining nine months the merchants were cut off from the world, and enjoyed life in their quiet way, with little regard to the doings of mankind.
Disasters to Spanish Commerce.
Now and then, however, a change came over the spirit of their dreams. The seas are notoriously uncertain, and ship-captains appointed by favor are not overmuch to be trusted. Disasters came. Galleons went to sea and never came to port; shattered bones lay on some inhospitable coast or found a grave on the bottom of the ocean. And as time went on, hostile ships visited the Pacific and made prizes of the rich galleons of Spain. Now the remittance from the Philippines failed to reach Mexico. Now the scores of broad dollars sent back, vanished on the seas.
The loss of the invincible Armada in 1588 put an end to Spain's naval supremacy, and the richly-freighted American galleons often became the prey of British buccaneers. The colony of the Philippines had then just been formed, and was not disturbed until the series of Anglo-Spanish wars before 1760, when its treasure-laden galleons were frequently swept away. This was notably the case after 1743, when Admiral Anson's fleet infested the coast and became the terror of the Spanish islanders. His exploits filled Manila with consternation, and councils were held to devise some method of getting rid of him; but he set all their efforts at naught. The captured galleon Pinar put a million and a half of dollars into his treasure-chest: the Covadouga yielded him immense wealth. Spies upon high promontories watched the seas for the dreaded British ships; the people of Manila were held ready to defend the city from assault; every one was on the alert.
For each lost galleon another was sent, and in some instances several galleons had to be despatched in a single year. Yet there were three or four occasions in which no galleon reached the Philippines for two or three years; while, after the capture of the Covadouga six years passed without a ship reaching the islands. The effect was disastrous: coin grew scarce, misery prevailed, the Chinese traders broke into open rebellion. There were other sources of revenue besides the Mexican subsidy, but the officials felt their incomes seriously straitened in these periods of want.
Other Nations Enter Into Competition.
Spain lost not only through war, but through peace. Her inelastic commerce invited competition, and British, Dutch, and other merchants began to cut down the great profits of the Philippine trade. These nations sent their ships to Canton, established factories, and bought goods for themselves, cutting off the Spanish monopoly of the traffic with the East. In 1731 foreign ships expended over $3,000,000 of Mexican coin in China for goods. These were smuggled into New Spain, not without help from Spaniards on shore. This proved a serious competition. The old hundred-per-cent. profit was no longer to be had. Acapulco was so beset with smugglers, whose merchandise found its way clandestinely to the city of Mexico, that, at times, buyers could not be found for the galleon-goods except at much reduced rates.
Fraud and Speculation.
Fraud now stepped in. Goods of inferior quality were sent and offered at old prices. Government inspectors were appointed at Manila to examine goods; but they filled their own pockets at the expense of the public service, and the frauds went on. Contraband goods were taken on the State-galleon itself, concealed in water-jars. The misfortunes that came to the Manila merchants in consequence, were due largely to their own fault: they had "sown the wind and reaped the whirlwind."
There were certain public funds in Manila that offered themselves to speculative uses. These--known as the Obras Pias--were legacies left by pious persons whose interest was to be used to pay for masses for their souls. Two-thirds were to be lent at interest to traders, the remainder being held to cover losses. The Casa Misericordia was another pious fund that was lent at 40 per cent., sinking to 20 per cent. as trade grew less profitable. In the end, speculative ventures made way with much of this accumulated cash; sorely, it may be, to the misery of the poor souls in Purgatory, waiting to be prayed into Paradise.
The Merchants of Cádiz.
A new competition with Philippine commerce came into play at the beginning of the eighteenth century,--that of the merchants of Cádiz, who had grown jealous of the shipments from Manila to Mexico, which they claimed were injurious to the home-trade. Petitions were therefore sent to the King, who, in response, put a new curb on the scanty island-commerce, prohibiting trade with China in woven goods, skins, silk, and clothing, except fine linen. The imports from China were limited to fine linen, porcelain, wax, pepper, cinnamon, and cloves. Six months' grace was given, after which all stocks of prohibited goods in Manila were to be burned, and all sent to Mexico to be confiscated. There was nothing strange in this decree. England was at that time practising the same restriction toward her American colonies, though she did not order any goods to be burned.
Royal Restrictions on Trade.
Decree followed decree during the ensuing years, all pointing to the same end. In 1720 it was decreed that in future two galleons might annually be sent to Mexico, but these were to be of only 500 tons, and their cargoes to be valued at $300,000, made up of non-prohibited goods. Ecclesiastics and foreigners were forbidden to have anything to do with trade. In 1726 the prohibition on silks was removed, but only one galleon was permitted to cross. A protest arose from Spain against the Philippine trade in woven goods, which was declared to be ruinous to the Spanish weaving industries, particularly as the galleons took back Mexican coin instead of Spanish goods. As a result, the 1720 decree was restored in 1731, to the dismay of the Philippine merchants and the people of Mexico. For they had to pay higher prices for Spanish goods, while their coffers were drained to meet the Philippine deficit.
Other Royal decrees were issued from time to time, favoring or injuring trade, and all with the general effect sure to arise from interference with the natural course of commerce. Among these were enactments intended to prevent Mexican capital from being invested in the Philippines. All was done that could be to keep the islands in a state of poverty and decadence.
To mention one further example of Spanish blindness--the priests. Their meddling proved worse than that of the King. Through their influence the non-Christian Chinese were expelled from the islands in 1755, and with them went an industry that caused a deficit of $30,000 a year in the taxes. Trade grew stagnant in consequence of the loss of these active shopkeepers, and the Philippines experienced what Spain had experienced when Philip II. banished the Moorish agriculturists and artisans. In both cases this concession to bigotry threw the country into a deplorable state, and years passed before prosperity returned.
COMMERCE DURING THE PRESENT CENTURY.
The Royal Company.
The closing of the Chinese shops in Manila and the expulsion of the Chinese merchants was the beginning of a new state of things in the islands. A joint-stock company was formed to buy clothing and staple goods for the Philippines, and sell at 30 per cent. advance. But the Spaniards lacked the keenness at bargaining that their predecessors possessed, and the company soon failed. Another company followed, under the favor of the King of Spain, who took a large block of its shares and gave it abundant privileges and monopolies. It--the Royal Company of the Philippines, fully organized in 1785--was given exclusive rights of trade, aside from the galleon trade with Acapulco. Foreign ships were not allowed to bring goods from Europe to the Philippines, though they could land Chinese and Indian goods.
There were old treaties that prohibited Spain from seeking the Pacific by the eastern route, her trade being via Cape Horn and Mexico. Charles III. quashed these treaties in favor of the Royal Company, whose ships were allowed to sail by way of the Cape of Good Hope. No one seriously objected--Spanish commerce was not worth an objection. With its large capital and its privileges the Royal Company should have flourished. But it never did. Yet it benefited the Philippines, and gave a great impulse to agriculture, on which large sums of money were expended. The culture of sugar, tobacco, cotton, indigo, and pepper was much developed, and these long remained the staples of many provinces.
The company had splendid opportunities, but failed to make the most of them. It broke down the vexatious prohibition to trade with the East and with Spain, which had checked Philippine enterprise, but the dry rot of Spanish incapacity caused its decay. Influence and intrigue brought men into the company that lacked ability, but received large salaries. As a result, it lost the power to compete with experts, while the contraband trade ate into its profits, and the merchants of Manila opposed its monopolies. Finally, in 1830, its privileges were taken away, and the island-colony was opened to the trade of the world. Five years afterward the Company ceased to exist.
The Restrictions Are Gradually Abolished.
Early in the nineteenth century foreigners made their way past the bars of restriction. A Mr. Butler first asked the privilege of residing in Manila, and opening up trade with Europe; but his humble petition was rejected as something monstrous,--an innovation that would put an end to the political security of the colony. Yet the needs of commerce forced Spain out of this illiberal attitude, and an American firm, Russell and Sturgis, was soon after admitted by favor of the Governor-General. Then Mr. Butler came back. Many others have since followed, and there are, to-day, about a dozen British and as many German and Swiss firms in the ports of Manila, Iloilo, and Cebú, together with firms of other nations.
The house of Russell & Sturgis was long prominent in Philippine trade. It opened up the sugar culture in the isle of Negros, invested a large amount of money in agriculture, and was long the mainspring of Philippine enterprise. But it was, in the end, victimized by the natives, to whom its capital had been largely advanced, and in 1875, to the amazement and consternation of the people, the great firm failed. For a time its failure paralyzed trade, but the minor firms it had overshadowed soon expanded, and business grew brisker than before.
Vexatious Duties on Foreign Imports.
But while foreign merchants were thus forcing their way into the Philippines, they had to contend against the peculiar Spanish ideas of commercial enterprise. The customs duties--at that time seven per cent. on goods in Spanish ships--were double that in foreign vessels. And the most vexatious regulations prevailed. Thus there was a system of levying tonnage-dues on foreign vessels in addition to duties, a cargo-ship being charged double the dues of one in ballast. If a ship in ballast should land the smallest parcel, it was at once charged the higher rate. And it is said that the officials sometimes bribed a sailor to carry a small bundle on shore, to give them a pretext to make the higher charge. The story is told, that, one shipmaster, who had brought a cargo of cobble-stones to Manila, was severely fined because his cargo proved to be one stone short of the number on his manifest.
In 1896 the collector of customs at Manila made $82,000 in this way, all of which went into his private purse. By exactions like these the Spanish officials managed to make their positions profitable, but they drove away trade, foreign shippers avoiding Manila.
Duties Made Uniform.
In 1869 a Royal decree was passed, making all decrees uniform, abolishing export duties, and doing away with the obnoxious port-charges. Since then foreign trade has been less hampered by Spanish privilege.
To-day subsidized Spanish steamers have most of the import trade, though the export trade is done mainly by foreign vessels. These carry cargoes to Asiatic ports, discharge them, and proceed in ballast to the islands. No foreigner is permitted to own a vessel trading between Spain and any of her colonies, or between one colony and another, or doing a coast-trade from island to island. But this law is readily evaded, by foreigners giving to Spaniards the nominal ownership of their vessels. In this way a large part of the internal trade of the Philippines has fallen into foreign hands.
Spanish Opposition to Foreign Trade.
Despite the fact that foreign trade has forced its way into the Philippines, every step has been gained against Spanish distrust and opposition. Spain is not a mercantile nation, and its commercial ideas are centuries behind the age. Only constant pressure forced the Philippine authorities into more liberal measures, yet the island-trade remained deplorably fettered, as compared with general commerce. Proposed reforms, demands to introduce modern improvements, were alike unwelcome, the Church especially resisting innovation. Useless and obstructive formalities stood in the way of trade; vexatious delays were made; and the development of the colony seems to have been the last thought in the Governor-General's mind.
By a Royal decree, in 1844, strangers were excluded from the interior of the islands. In 1857 old decrees were used to prevent foreign establishments in the colony. In 1886 foreign trade was declared prejudicial to the "material interests of the country."
Trade with the Natives.
The conservatism and ignorance of the natives have similarly stood in the way of commercial progress. They could not be made to understand that the change in quotations was not due to the caprice of buyers. Many of them lost by withholding goods when the quotations did not please them. Only in 1884, when the whole world was affected by the crisis in the sugar trade, could they be made to perceive that quotations were quite beyond the control of the merchants.
Accustomed to deal with the Chinese, the natives have no fixed prices for their products. The Chinese understand them, and put prices on their goods that will allow for a large reduction. In the end, the native goes away contented, though the shrewd Chinaman has usually the best of the bargain. Even important mercantile houses seldom state prices, business being conducted on the shifting Asiatic scale. Foreign capitalists distrust trade with the natives, whose word usually cannot be depended upon, and employ middlemen to collect produce. These are persons born in the colony, who understand at once the business methods of the foreigner and the shifty customs of the natives. And they generally bring the opposite parties to terms.
The only real basis of wealth in the Philippines is the raw material of agriculture and the forest. Nothing has been done to foster the industrial arts, and the manufactures are insignificant, the cigar product being the principal one.
The Decline of American Trade.
From the opening of the large export trade until recently, Americans were supreme. But the failure of the great house of Russell & Sturgis made a change. Other traders rose upon their ruins, and of late years England has gained the bulk of the trade. The downfall of the Americans was completed after the outbreak of the Cuban troubles in 1895. The Spanish hatred of the Yankee was reflected in these far-off islands, and, by petty annoyances that soon became intolerable, the last American firms were crowded out.
Recent Measures and Statistics.
In 1891 a protective tariff was laid by Spain on the trade of the Philippines. This diverted to the home-country most of the traffic formerly enjoyed by England and other countries. Iron goods and hardware are now furnished principally by Germany and Switzerland, but the Manchester cotton goods are supplemented by similar fabrics made in Barcelona. The imports from the United States are chiefly kerosene oil and flour.
As an indication of the growth of Philippine trade since the intrusion of foreign shippers put an end to the mediæval obstructions of Spain, some figures may be quoted:
In 1841 the imports of the islands aggregated in value $3,230,000, the exports, $4,370,000. In 1885 the imports had increased to $19,171,468; the exports to $24,553,686. In 1893 the imports aggregated $25,500,000; the exports $30,000,000. These figures are estimated, however, in Mexican dollars, the currency of the islands, which is at a large discount elsewhere.
In 1895 the principal exports of the Philippines were: Hemp, $14,517,000; sugar, $10,975,000; tobacco, $3,159,000; cocoanuts, $356,000. This fell off greatly in 1896, on account of the increased scale of export duties, hemp declining to $7,500,000, and sugar to $10,975,000.
On August 21, 1897, a decree went into effect that imposed an extraordinary customs duty of 6 per cent. ad valorem on all merchandise imports, without regard to the country whence they came.
The trade of the United States with the Philippines has been steadily on the decline within recent years. In 1888 their imports from the islands were valued at $10,268,278; in 1897, at $4,383,760. The export trade has always been insignificant, as compared with European countries. In 1889 it aggregated $165,903; in 1897 it was only $94,567. During the same period the exports of Spain to the islands increased from $890,000 to $7,972,583. These were principally cotton fabrics. The exports from the United States embraced mineral oil, bread stuffs, cotton goods, chemicals, iron and steel goods. Of the imports, the most important were Manila hemp and sugar; other imports include cigars, tobacco, woods, hides, shells, indigo, and coffee.
Bad Result of Spanish Rule.