In order to protect the companyʼs interests, foreign ships were not allowed to bring goods from Europe to the Philippines, although they could land Chinese and Indian wares.
By the Treaties of Tordesillas and Antwerp (q.v.), the Spaniards had agreed that to reach their Oriental possessions they would take only the Western route, which would be viá Mexico or round Cape Horn. These treaties, however, were virtually quashed by King Charles III. on the establishment of the “Real Compañia de Filipinas.” Holland only lodged a nominal protest when the companyʼs ships were authorized to sail to the Philippines viá the Cape of Good Hope, for the Spaniardsʼ ability to compete had, meanwhile, vastly diminished.
With such important immunities, and the credit which ought to have been procurable by a company with ₱8,000,000 paid-up capital, its operations might have been relatively vast. However, its balance sheet, closed to October 31, 1790 (five-and-a-half years after it started), shows the total nominal assets to be only ₱10,700,194, largely in unrecoverable advances to tillers. The working account is not set out. Although it was never, in itself, a flourishing concern, it brought immense benefit to the Philippines (at the expense of its shareholders) by opening the way for the Colonyʼs future commercial prosperity. This advantage operated in two ways. (1) It gave great impulse to agriculture, which thenceforth began to make important strides. By large sums of money, distributed in anticipation of the 4 per cent, on nett profit, and expended in the rural districts, it imparted life, vigour and development to those germs of husbandry—such as the cultivation of sugar-cane, tobacco, cotton, indigo, pepper, etc.—which, for a long time had been, and to a certain extent are still, the staple dependence of many provinces. (2) It opened the road to final extinction of all those vexatious prohibitions of trade with the Eastern ports and the Peninsula which had checked the energy of the Manila merchants. It was the precursor of free trade—the stepping-stone to commercial liberty in these regions.
The causes of its decline are not difficult to trace. Established as it was on a semi-official basis, all kinds of intrigues were resorted to—all manner of favouritism was besought—to secure appointments, more or less lucrative, in the Great Company. Influential incapacity prevailed over knowledge and ability, and the men intrusted with the direction of the companyʼs operations proved themselves inexperienced and quite unfit to cope with unshackled competition from the outer world. Their very exclusiveness was an irresistible temptation to contrabandists. Manila private merchants, viewing with displeasure monopoly in any form, lost no opportunity of putting obstacles in the way of the company. Again, the willing concurrence of native labourers in an enterprise of magnitude was as impossible to secure then as it is now. The native had a high time at the expense of the company, revelling in the enjoyment of cash advances, for which some gave little, others nothing. Success could only have been achieved by forced labour, and this right was not included in the charter.
In 1825 the company was on the point of collapse, when, to support the tottering fabric, its capital was increased by ₱12,500,000 under Real Cédula of that year, dated June 22. King Charles IV. took 15,772 (₱250) shares of this new issue. But nothing could save the wreck, and finally it was decreed, by Real Cédula of May 28, 1830, that the privileges conceded to the “Real Compañia de Filipinas” had expired—and Manila was then opened to Free Trade with the whole world. It marked an epoch in Philippine affairs.
In 1820 the declared independence of Mexico, acknowledged subsequently by the European Powers, forced Spain to a decision, and direct trade between the Philippines and the mother country became a reluctant necessity. No restrictions were placed on the export to Spain of colonial produce, but value limitations were fixed with regard to Chinese goods. The export from the Philippines to Acapulco, Callao, and other South American ports was limited to ₱750,000 at that date. In the same year (1820) permission was granted for trade between Manila and the Asiatic ports. Twenty-two years afterwards one-third of all the Manila export trade was done with China.
When the galleons fell into disuse, communication was definitely established with Spain by merchant sailing ships viâ the Cape of Good Hope, whilst the opening of the Suez Canal (1869) brought the Philippines within 32 daysʼ journey by steamer from Barcelona.
The voyage viâ the Cape of Good Hope occupied from three to six months; the sailings were less frequent than at the present day, and the journey was invariably attended with innumerable discomforts. It was interesting to hear the few old Spanish residents, in my time, compare their privations when they came by the Cape with the luxurious facilities of later times. What is to-day a pleasure was then a hardship, consequently the number of Spaniards in the Islands was small; their movements were always known. It was hardly possible for a Spaniard to acquire a sum of money and migrate secretly from one island to another, and still less easy was it for him to leave the Colony clandestinely.
The Spaniard of that day who settled in the Colony usually became well known during the period of the service which brought him to the Far East. If, after his retirement from public duty, on the conclusion of his tenure of office, he decided to remain in the Colony, it was often due to his being able to count on the pecuniary support and moral protection of the priests. The idea grew, so that needy Spaniards in the Philippines, in the course of time, came to entertain a kind of socialistic notion that those who had means ought to aid and set up those who had nothing, without guarantee of any kind: “Si hubiera quien me proteja!” was the common sigh—the outcome of Cæsarism nurtured by a Government which discountenanced individual effort. Later on, too, many natives seemed to think that the foreign firms, and others employing large capital, might well become philanthropic institutions, paternally assisting them with unsecured capital. The natives were bred in this moral bondage: they had seen trading companies, established under royal sanction, benefit the few and collapse; they had witnessed extensive works, undertaken por viâ de administracion miscarry in their ostensible objects but prosper in their real intent, namely, the providing of berths for those who lived by their wits.
The patriarchal system was essayed by a wealthy firm of American merchants (Russell & Sturgis) with very disastrous results to themselves. They distributed capital all over the Colony, and the natives abused their support in a most abominable manner. A native, alleging that he had opened up a plantation, would call on the firm and procure advances against future crops after scant inquiry. Having once advanced, it was necessary to continue doing so to save the first loans.