Philippine progress prior to 1898

by Austin Craig; Conrado O. Benitez

What were the causes that led to the ill success of the Royal Company? Among the minor causes mentioned was the indifference of the residents of the Philippines; for, as Zuñiga says,[9] “taught to gain in New Spain what is necessary for their comfort, without any more work than sending a memorial once every year, it is hard for them to engage in a commerce which is servile and vexatious; and, accustomed to exorbitant profits, they cannot adapt themselves to the gradual profits in a store; * * *. Furthermore, the company neglected to import the goods from Europe, such as wines and groceries, which the foreign ships brought at great profit.”

It also failed to establish direct trade relations with China and India, but depended solely on buying the goods which were brought there by the Chinese and other foreign traders; hence, it had to pay higher prices for the Oriental goods it sent to Europe. The company, too, overestimated the importance of certain Philippine products, especially spices, which were produced much more cheaply in Sumatra and Java. Though allowed to invest only four per cent of its net profits in agriculture during the first years of its existence, it invested great sums in buying lands, made advances to the producers; in other words, it engaged in much speculation, which proved disastrous. It also gave premature attention to the development of manufacturing. The chief cause, however, of the failure of the company was the fact that it was not given control of the Manila-Acapulco trade, which continued to absorb the attention of the very men, who, because of experience in the country, would have helped the Company during its formative years.[10]

According to Dr. Tavera, the Royal Company introduced capital, which was essential for economic development.[11]

The opening of the ports.

Even before the coming of Basco, the taking of Manila by the English in 1762 had a good economic effect, for it acquainted England with the natural resources of the Philippines, and the possibilities for material development.[12] Perhaps as a result of the information thus gained, we find an English commercial house obtaining permission to establish itself in Manila in 1809. And in 1814, probably due to the liberalizing influence of the war of independence just closed in Spain, it was stipulated that all colonial ports still restricted should be opened to foreign traffic, and that foreigners should be allowed to enter, and engage in commercial activities; thus was swept away the restrictive colonial policy, which had prevailed among the European nations, and which Spain was the very last to abandon. In the beginning, however, there was need of special royal permission for each foreign house established. Later on the permission of the Governor General only sufficed.[13] An earlier edict of the Philippine government, repeated in 1828 and again in 1840, forbade foreigners to sell at retail or to enter the provinces to carry on business of any kind.[14] In 1842 there were in Manila thirty-nine Spanish shipping and commercial houses, and about a dozen foreign houses, of which seven or eight were English, two were Americans, one was French, and another Danish, while consuls of France, the United States, Denmark, Sweden, and Belgium resided there.[15] By about 1859, according to Bowring, there were in Manila seven English, three American, two French, two Swiss, and one German commercial establishments; and in the other ports, there was no European business house, except one in Iloilo, where there was an English firm of which the British vice-consul was the directing partner.[16]

Once Manila was opened, the advocates of greater freedom did not rest content with only one free port, because there were great difficulties in connection with the exportation of products from the places far from Manila. The products of the Ilocano provinces, southern Luzon, and the Visayas, and even Mindanao, had all to be taken to Manila, and from there, exported. Thus, the system entailed unnecessary risks, waste of time, and extra expense.[17] Accordingly, at the request of the government of the Philippines, Royal Order of September 29, 1855, approved the opening of the ports of Sual (Pangasinan), Iloilo, and Zamboanga. And lastly, by Royal Decree of July 30, 1860, Cebu, which up to that time was obliged to send her products for exportation either to Manila or Iloilo, was opened.

Effects of the opening of the ports.

Taking the increase of exports as an indication of greater agricultural and commercial activity, we find that, with the opening of the ports, exports increased; and these now consisted of the products of the country, instead of manufactured goods brought from elsewhere in the Orient.[18] By 1839, the Philippines exported 2,674,220 pesos of her own products, as against 500,000 pesos in 1810.[19] Sugar in 1782, was the only product which was attracting any attention, because at the time, thirty-thousand piculs of it had been exported; in 1840, 146,661 piculs were exported; in 1854 the amount had increased to 566,371, almost four times greater than in 1840; and in 1857 the amount reached 714,059 piculs.[20] Similarly, the amount of hemp exported increased, in spite of the fact that it found its way in the world’s market for the first time only in the early part of the nineteenth century.[21]