Under the auspices of the late Mr. Nicholas Loney, great impulse was given to the commerce of Yloilo, and, due to his efforts, the Island of Negros was first opened up. His memory is still revered, and he is often spoken of as the original benefactor to the trading community of that district. Russell & Sturgis subsequently extended their operations to that locality. The result was that they were deceived in every direction by the natives, who, instead of bringing in produce to pay off advances, sent their sons to college, built fine houses, bought pianos, jewellery, etc., and in a hundred ways satisfied their pride and love for outward show in a manner never known before, at the expense of the American capitalists. As bankers, the firm enjoyed the unlimited confidence of those classes who had something to lose as well as to gain; hence it is said that, the original partners having withdrawn their money interest, the firm endeavoured to continue the business with a working capital chiefly derived from the funds deposited by private persons at 8 per cent, per annum. All might have gone well but for the rascality of the native agriculturists, who brought about the failure of the house in 1875 by taking loans and delivering no produce. The news amazed everybody. Trade was, for the moment, completely paralyzed. The great firm, which for years had been the mainspring of all Philippine mercantile enterprise, had failed! But whilst many individuals suffered (principally depositors at interest), fifty times as many families to-day owe their financial position to the generosity of the big firm; and I could mention the names of half a dozen real-estate owners in Yloilo Province who, having started with nothing, somehow found themselves possessing comparatively large fortunes at the time of the liquidation.
Consequent on the smash, a reaction set in which soon proved beneficial to the Colony at large. Foreign and Spanish houses of minor importance, which had laboured in the shade during the existence of the great firm, were now able to extend their operations in branches of trade which had hitherto been practically monopolized.
Before Manila was opened to foreign trade, even in a restricted form, special concessions appear to have been granted to a few traders. One writer mentions that a French mercantile house was founded in Manila many years prior to 1787, and that an English firm obtained permission to establish itself in 1809. In 1789 a foreign ship was allowed to enter the port of Manila and to discharge a cargo. This would appear to have been the first. In olden times the demand for ordinary foreign commodities was supplied by the Chinese traders and a few Americans and Persians. During the latter half of the 18th century a Spanish man-of-war occasionally arrived, bringing European manufactures for sale, and loaded a return cargo of Oriental goods.
The Philippine Islands were but little known in the foreign markets and commercial centres of Europe before the middle of the 19th century. Notwithstanding the special trading concessions granted to one foreigner and another from the beginning of last century, it was not until the port of Manila was unrestrictedly opened to resident foreign merchants in 1834 that a regular export trade with the whole mercantile world gradually came into existence.
It is said that whilst the charter of the “Real Compañia de Filipinas” was still in force (1785–1830) a Mr. Butler[7] solicited permission to reside in and open up a trade between Manila and foreign ports; but his petition was held to be monstrous and grievously dangerous to the political security of the Colony; hence it was rejected. The Spaniards had had very good reason to doubt foreign intercourse after their experience of 1738, when they preferred a war with England to a gross abuse of the Asiento contract entered into under the Treaty of Utrecht.[8] Subsequently the American firm already mentioned, Russell & Sturgis, made a request to be allowed to trade, which, having the support of the Gov.-General of the day, was granted; and Mr. Butler, taking advantage of this recent precedent, also succeeded in founding a commercial house in Manila. To these foreigners is due the initiation of the traffic in those products which became the staple trade of the Colony and paved the way for the bulk of the business being, as it is to-day, in the hands of European and American merchants.
The distrustful sentiment of olden times (justifiable in the 18th century) pervaded the Spaniardsʼ commercial and colonial policy up to their last day. Proposed reforms and solicitations for permission to introduce modern improvements were by no means welcomed. In the provinces clerical opposition was often cast against liberal innovations, and in the Government bureaux they were encompassed with obstructive formalities, objections, and delays.[9]
By Royal Ordinance of 1844 strangers were excluded from the interior; in 1857 unrepealed decrees were brought forward to urge the prohibition of foreigners to establish themselves in the Colony; and, as late as 1886, their trading here was declared to be “prejudicial to the material interests of the country.”[10]
The support of the friars referred to in p. [255] became a thing of the past. Colonists had increased tenfold, the means of communication and of exit were too ample for the security of the lenders, who, as members of religious communities, could not seek redress at law, and, moreover, those “lucky hits” which were made by penniless Europeans in former times by pecuniary help “just in the nick of time” were no longer possible, for every known channel of lucrative transaction was in time taken up by capitalists.
It was the capital brought originally to the Philippines through foreign channels which developed the modern commerce of the Colony, and much of the present wealth of the inhabitants engaged in trade and agriculture is indirectly due to foreign enterprise. Negros Island was entirely opened up by foreign capital. In Manila, the fathers of many of the half-castes and pure natives who at this day figure as men of position and standing, commenced their careers as messengers, warehouse-keepers, clerks, etc., of the foreign houses.