The Philippine merchants often lost the value of their shipments in the State galleons by shipwreck or seizure by enemies. Mexico frequently lost the Philippine remittances to her, and the specie she sent to the Philippines. The State galleon made only one voyage a year there and back, if all went well; but if it were lost, the shipment had to be renewed, and it often happened that several galleons were seized in a year by Spainʼs enemies.
The abortive attempt to annex the British Isles to the Spanish Crown in 1588 brought about the collapse of Spainʼs naval supremacy, enabling English mariners to play havoc with her galleons from America. The Philippine Islands, as a colony, had at that date only just come into existence, but during the series of Anglo-Spanish wars which preceded the “Family Compact” (vide p. [87]), Philippine-Mexican galleons laden with treasure became the prey of British commanders, notably Admiral Anson. The coasts were beset by Ansonʼs squadron. He was the terror of the Philippines from the year 1743. His exploits gave rise to consternation, and numerous councils were held to decide what to do to get rid of him. The captured galleon Pilar gave one-and-a-half million pesos to the enemy—the Covadonga was an immense prize. All over the Islands the Spaniards were on the alert for the dreaded foe; every provincial Governor sent look-outs to high promontories with orders to signal by beacons if the daring Britisherʼs ships were seen hovering about, whilst, in Manila, the citizens were forewarned that, at any moment, they might be called upon to repel the enemy.
Not only in fleets of gold-laden vessels did Spain and her dependencies lose immense wealth through her hostile ambition, for in view of the restrictions on Philippine trade, and the enormous profits accruing to the Spanish merchants on their shipments, British, Dutch, French, and Danish traders competed with them. Shippers of these nationalities bought goods in Canton, where they established their own factories, or collecting-stores. In 1731 over three millions of Mexican dollars (pesos) were taken there for making purchases, and these foreign ships landed the stuffs, etc., in contraband at the American ports, where Spaniards themselves co-operated in the trade which their absolute King declared illicit, whilst the traders considered it a natural right.
As the Southern (Peninsula) Spanish merchants were helpless to stay this competition, which greatly affected their profits, their rancorous greed made them clamour against the Philippine trade, to which they chose to attribute their misfortunes, and the King was petitioned to curtail the commerce of this Colony with Mexico for their exclusive benefit. But it was not Spanish home trade alone which suffered: Acapulco was so beset by smugglers, whose merchandise, surreptitiously introduced, found its way to Mexico City, that, in latter days, the Philippine galleonsʼ cargoes did not always find a market. Moreover, all kinds of frauds were practised about this time in the quality of the goods baled for shipment, and the bad results revealed themselves on the Mexican side. The shippers, unwisely, thought it possible to deceive the Mexicans by sending them inferior articles at old prices; hence their disasters became partly due to “the vaulting ambition that oʼerleaps itself and falls on tʼother side.” The Governor commissioned four of the most respectable Manila traders to inspect the sorting and classification of the goods shipped. These citizens distinguished themselves so highly, to their own advantage, that the Governor had to suppress the commission and abandon the control, in despair of finding honest colleagues. Besides this fraud, contraband goods were taken to Acapulco in the galleons themselves, hidden in water-jars.
In the time of Governor Pedro de Arandia (1754–59) the 100 per cent. fixed profit was no longer possible. Merchants came down to Acapulco and forced the market, by waiting until the ships were obliged to catch the monsoon back, or lie up for another season, so that often the goods had to be sold for cost, or a little over. In 1754 returns were so reduced that the Consulado was owing to the Obras Pias over ₱300,000, and to the Casa Misericordia ₱147,000, without any hope of repayment. The Casa Misericordia lent money at 40 per cent., then at 35 per cent., and in 1755 at 20 per cent. interest, but the state of trade made capital hardly acceptable even at this last rate.
Early in the 18th century the Cadiz merchants, jealous of the Philippine shippers, protested that the home trade was much injured by the cargoes carried to Mexico in Philippine bottoms. So effectually did they influence the King in their favour that he issued a decree prohibiting the trade between China and the Philippines in all woven stuffs, skein and woven silk and clothing, except the finest linen. Manila imports from China were thereby limited to fine linen, porcelain, wax, pepper, cinnamon, and cloves. At the expiration of six months after the proclamation of the decree, any remaining stocks of the proscribed articles were to be burnt! Thenceforth trade in such prohibited articles was to be considered illicit, and such goods arriving in Mexico after that date were to be confiscated.
By Royal Decree dated October 27, 1720, and published in Mexico by the Viceroy on February 15, 1724, the following was enacted, viz.:—That in future there should be two galleons per annum, instead of one as heretofore, carrying merchandise to Acapulco, each to be of 500 tons. That the merchandise sent in the two was to be of the value of ₱300,000 precisely in gold, cinnamon, wax, porcelain, cloves, pepper, etc., but not silks, or stuffs of any kind containing silk, under pain of confiscation, to be allotted in three equal parts, namely, to the Fiscal officer, the Judge intervening, and the informer, and perpetual banishment from the Indies of all persons concerned in the shipment. That the number of Manila merchants was to be fixed, and any one not included in that number was to be prohibited from trading. No ecclesiastic, or professor of religion, or foreigner could be included in the elected few, whose rights to ship were non-transferable. That if the proceeds of the sale happened to exceed the fixed sum of ₱600,000, on account of market prices being higher than was anticipated, only that amount could be brought back in money, and the difference, or excess, in goods. [If it turned out to be less than that amount, the difference could not be remitted in cash by Mexican merchants for further purchases, the spirit of the decree being to curtail the supply of goods from this Colony to Mexico, for the benefit of the Spanish home traders. The infringer of this regulation was subject to the penalties of confiscation and two yearsʼ banishment from the Indies.]
By Royal Decree of the year 1726, received and published in Manila on August 9, 1727, the following regulations were made known, viz.:—That the prohibition relating to silk and all-silk goods was revoked. That only one galleon was to be sent each year (instead of two) as formerly. That the prohibition on clothing containing some silk, and a few other articles, was maintained. That for five years certain stuffs of fine linen were permitted to be shipped, to the limit of 4,000 pieces per annum, precisely in boxes containing each 500 pieces.
The Southern Spanish traders in 1729 petitioned the King against the Philippine trade in woven goods, and protested against the five-yearsʼ permission granted in the above decree of 1726, declaring that it would bring about the total ruin of the Spanish weaving industry, and that the galleons, on their return to the Philippines, instead of loading Spanish manufactures, took back specie for the continuance of their traffic to the extent of three or four millions of pesos each year. The King, however, refused to modify the decree of 1726 until the five years had expired, after which time the Governor was ordered to load the galleons according to the former decree of 1720.
The Manila merchants were in great excitement. The Governor, under pretext that the original Royal Decree ought to have been transmitted direct to the Philippines and not merely communicated by the Mexican Viceroy, agreed to “obey and not fulfil” its conditions.