Towards the close of the eighteenth century there were events which indicated the coming of greater liberty. Direct communication was established in 1765 between Manila and Spain by means of a warship which was to sail annually from Cadiz, with European goods, and to come back loaded, not only with the products of the Philippines, but also with Oriental merchandise, including goods from China and Japan. However, the innovation was not well received in Manila, due perhaps to the monopolistic habit of the merchants, and, in 1783, these annual voyages were discontinued.[1]
The coming of Governor José de Basco y Vargas marked a new era in the economic history of the country, for two important events happened during his term: the establishment of the Sociedad Económica de Amigos del Pais, in 1781, and of the Real Compañía de Filipinas, in 1785. These may be considered to be the most serious attempts of Spain throughout her rule, to develop the natural resources of the Philippines.
The Sociedad Económica de Amigos del País.
Basco’s idea was to make the Philippines economically self-sufficing, and not dependent on Mexico. For this reason, he encouraged the development of agriculture by offering prizes to those who would excel in the cultivation of cotton, spices, sugar and silk; those who would open up the various kinds of mines; those who invented useful things, and those who excelled in the arts and sciences. Likewise, he issued circulars and pamphlets explaining the method of cultivating the different Philippine crops. In order to get the community’s co-operation in carrying out his economic plan, he induced the King to issue a decree establishing the Economic Society. In spite of serious opposition on the part of many, the society was auspiciously inaugurated in 1782. It seemed, however, as if Basco’s ideas were too advanced for his time, for the society led a declining life up to 1822. A memoir published by the Society[2], and containing a list of its achievements, shows its activity to have consisted of discussions of economic subjects; the publication of pamphlets dealing with the cultivation of coffee, sugar, indigo, silk, gutta-percha, hemp, cacao, and other plants; the offering of prizes to persons who succeeded in weaving cloths, making dyes, inventing hemp-stripping machines, and contributing other useful things to agriculture; and the introduction of agricultural implements of various kinds from the United States. The Society lived for over a century, till 1890. Another means resorted to by Basco to free the Philippines from its dependence on Mexico was the establishment of the tobacco monopoly by the government. This proved to be a good source of revenue, and, at the same time, was instrumental in bringing into cultivation large tracts of land. However, the evils attending it were many; the abuses of the government officials in enforcing the regulations, and in trying to make profits for themselves; the lack of incentive on the part of the producer to improve the quality of his tobacco; the existence of smuggling and bribery, and the poverty of the farmer; all these were attributed to the tobacco monopoly.[3]
The Royal Company.
The second important event during Basco’s rule was the establishment of the “Real Compañía de Filipinas” by royal decrece of March 10, 1785. The capital of the company was fixed at eight million pesos divided into 32,000 shares of two hundred and fifty pesos each; the king bought four thousand shares, and the citizens of Manila were allowed three thousand. The chief object of the company was to establish commercial relations among the different colonies, and also between the colonies and Spain; to supply Manila with the products of Europe, and, in return, to carry to Spain not only the products of the Philippines, but also the merchandise coming from the Oriental countries. The second important object was the encouragement of Philippine agriculture, as shown in section four of the charter, which required the company to invest four per cent. of its net profits in some extractive industries, chiefly agriculture. In order to help the company, all the laws and decrees which prohibited the importation of Oriental cloths into Spain, were repealed, and the products of the Philippines were exempted from all kinds of duties both in Manila and in Spain. Furthermore, the merchants of Manila were allowed to go to the Asiatic ports for trade, and the Chinese who came to Manila were allowed to trade freely without subjecting themselves to any restrictions. However, the old Manila-Acapulco trade was not to be disturbed, for the company could not send ships to Acapulco.
The company encouraged the production of silk,[4] indigo,[5] sugar,[6] cotton,[7] and especially of pepper and other spices. For this purpose it bought lands, established posts in Ilocos, Bataan, Cavite, and Camarines, and offered prizes. It also gave stimulus to manufacturing by establishing textile factories.
In spite of the special protection and privileges granted to the company, it declined from year to year. In 1805 it was rechartered, and given fifteen years of life and the same privileges as before; its capital was fixed at twelve and a half million pesos divided into shares of two hundred and fifty pesos each; foreigners were allowed to own shares; and the ships were allowed to sail directly from the Asiatic ports without stopping at Manila; and finally the three-year privilege,[8] allowed to foreigners at the request of the company in 1789, of importing into Manila Asiatic goods, and exporting the products of the country, was made perpetual. In 1830 its privileges were revoked, and Manila was left open to foreign commerce and navigation.