IV. Trade and Commerce: the Period of Restrictions
Hardly had wealth been created by the commerce of the first years after the conquest, when the policy of restriction found its strong supporters in the merchants of Cadiz and Seville, who, accustomed to monopolize the trade with America, looked with jealous eyes upon the rapidly growing prosperity of Manila, the new center of trade. The cotton and silk cloths from China were underselling in Mexico those coming from Spain and Peru, and a good deal of the silver was going, not to Spain, but to the East; hence, the long drawn-out rivalry between Manila, on the one hand, and Cadiz, and Seville, on the other, with America as a third party, also working for her own interest. This commercial activity was the phenomenon which dominated the Philippines for over two centuries, and had such marked influence upon its whole economic development.
Before giving the various decrees passed from time to time to regulate this commerce, it is advisable to discuss the arguments advanced by the two sides. The Spanish merchants contended that the competition of goods coming from the East would destroy the manufactures on the Peninsula; and, further, that the sending of silver to the Orient, would drain the supply available for Spain, and, therefore, in accordance with the mercantilist doctrine, should be prevented. Manila answered by saying that the goods that she exported to New Spain were different from those coming from Spain; therefore, there was really no competition between them. In other words, the demand for either kind of goods was separate from, and independent of, the demand for the other.[1] Other arguments were advanced to prove that Manila should be treated with consideration; the driving out of the Dutch from the Moluccas by the Philippine government,[2] the preservation of the missionary conquests in the Far East,[3] and the maintenance of the prestige of the Spanish crown,[4] all of these would result from the maintenance of the Philippines, by making it possible for her to support herself with the galleon trade. These, added to the fact that the trade with New Spain was not so profitable as commonly reported[5] on account of the many perils involved in it, entitled Manila to a more liberal treatment.