There were a great many well-to-do Spaniards in trade, but few whose funds on starting were brought by them from the Peninsula. The first Spanish steamer-owner in the Colony, a baker by trade, owed his prosperity to the support of Russell & Sturgis. One of the richest Spanish merchants (who died in 1894) once kept a little grocerʼs shop, and after the failure of Russell & Sturgis he developed into a merchant and shipowner whose firm became, in time, the largest Spanish house operating in hemp and other produce.
About 14 Spanish firms of a certain importance were established in Manila, Yloilo, and Cebú, in addition to the Europeans trading here and there on the coasts of the Islands. In Manila there were (and are still) two foreign bank branches[11] (one with a sub-branch in Yloilo), three bank agencies, and the Philippine private banking-house of J. M. Tuason & Co.; also the “Banco Español-Filipino,” which was instituted in 1852, with a capital of ₱400,000, in 2,000 shares of ₱200 each. The capital was subsequently increased to ₱600.000.[12] Authorized by charter, it issued notes payable to bearer on demand from ₱10 upwards. The legal maximum limit of note issue was ₱1,200,000, whilst the actual circulation was about ₱100,000 short of that figure. This bank did a very limited amount of very secure business, and it has paid dividends of 12 to 15 per cent.; hence the shares were always at a premium. In 1888, when 12 per cent, dividend was paid, this stock was quoted at ₱420; in 1895 it rose to ₱435. The Obras Pias funds (vide p. [245]) constituted the orginal capital of the bank. The new position of this institution, under the (American) Insular Government since 1905, is explained in Chapter [xxxi].
The first Philippine bank was opened in Manila by a certain Francisco Rodriguez about the year 1830.
From the conquest up to the year 1857 there was no Philippine coinage. Mexican dollars were the only currency, and in default of subsidiary money these dollars, called pesos, were cut. In 1764 cut money was prohibited, and small Spanish silver and copper coins came to the Islands. In 1799 the Gov.-General forbade the exportation of money, and fixed the peso at 8 reales fuertes and the real at 17 cuartos. Shortly afterwards gold came to the Islands, and was plentiful until 1882. In 1837 other copper coins came from Spain, and the real fuerte was fixed at 20 cuartos. In 1857 the Manila mint was established, pesetas were introduced, five being equal to one peso, and 32 cuartos being equal to one peseta. Contemporaneously the coinage in Spain was 34 cuartos to one peseta and 5 pesetas to one duro—the coin nominally equivalent to the peso—but the duro being subdivided into 20 reales vellon, the colonial real fuerte came to be equivalent to 2½ reales vellon. The evident intention was to have one common nominal basis (peso and duro), but subdivided in a manner to limit the currency of the colonial coinage to its own locality. With pesos, reales, cuartos, maravedis, and ounces of gold, bookkeeping was somewhat complicated; however, the Government accounts were rendered easy by a decree dated January 17, 1857, which fixed pesos and cents for official reckoning. Merchants then adopted this standard. Up to 1860 gold was so abundant that as much as 10 per cent, was paid to exchange an onza of gold (₱16) for silver. In 1878 gold and silver were worth their nominal relative values. Gold, however, has gradually disappeared from the Colony, large quantities having been exported to China. In 1881 the current premium for purchasing gold was 2 per cent., and at the beginning of 1885 as much as 10 per cent. premium was paid for Philippine gold of the Isabella II or any previous coinage. The gold currency of Alfonso XII. (1875–85) was always of less intrinsic value than the coin of earlier date, the difference averaging about 2 per cent. At the present day gold could only be obtained in very limited quantities at about the same rate as sight drafts on Europe. Philippine gold pieces are rare.
In 1883 Mexican dollars of a later coinage than 1877 were called in, and a term was fixed after which they would cease to be legal tender. In 1885 decimal bronze coins were introduced. In July, 1886, a decree was published calling in all foreign and Chinese chop dollars[13] within six months, after which date the introducer of such coin into the Colony would be subject to the penalty of a fine equal to 20 per cent. of the value imported, the obligation to immediately re-export the coin, and civil action for the misdemeanour. At the expiration of the six months the Treasury was not in a position to effect the conversion of the foreign medium in private hands prior to the publication of the decree. The term was extended, but in time the measure became practically void, so far as the legal tender was concerned. However, the importation of Mexican dollars was still prohibited; but, as they remained current in Manila at par value, whilst in Hong-Kong and Singapore they could be bought for 8 to 12 per cent, (and in 1894 25 per cent.) less than Manila dollars, large quantities were smuggled into the Colony. It is estimated that in the year 1887 the clandestine introduction of Mexican dollars into Manila averaged about ₱150,000 per month. I remember a Chinaman was caught in September, 1887, with ₱164,000, imported in cases declared to contain matches. In 1890 there was a “boom” in the silver market. Owing to the action of the American Silverites, the Washington Treasury called for a monthly supply of 4,000,000 of silver dollars; consequently sight rate on London in Hong-Kong touched 3s. 10¼d., and in Manila rose to 3s. 10½d., but a rapid reaction set in when the Treasury demand ceased. In 1895 we heard in Manila that the Government were about to coin Philippine pesos and absolutely demonetize Mexicans as a medium in the Islands. But this measure was never carried out, probably because the Government had not the necessary cash with which to effect the conversion. Some few Philippine peso pieces were, however, put into circulation concurrently with the Mexican pesos.
In June, 1903, the ss. Don Juan, owned by Francisco L. Rojas, of Manila, took on board in Hong-Kong about $400,000 Mexicans (i.e., pesos) for the purpose of smuggling them into Manila. On board there were also, as passengers, a Señor Rodoreda and a crowd of Chinese coolies. The vessel caught fire off the west coast of Luzon. The captain, the crew, and the Spanish passenger abandoned the ship in boats, leaving the Chinese to their awful fate. A steam launch was sent alongside and saved a few dollars, whilst the despairing Chinese became victims to the flames and sharks. The shipʼs burnt-out hull was towed to Manila Bay. The remaining dollars were confiscated, and the captain and chief engineer were prosecuted.
The universal monetary crisis due to the depreciation of silver was experienced here, and the Government made matters still worse by coining half-pesos and 20-cent pieces, which had not the intrinsic value expressed, and exchange consequently fell still lower. In September, 1887, a Madrid periodical, Correo de España, stated that the bastard Philippine 50-cent pieces were rejected in Madrid even by money-changers. In May, 1888, the peso was quoted at 3s.2¾d. (over 19 per cent. below nominal value), and shippers to the Colony, who had already suffered considerably by the loss on exchange, had their interests still further impaired by this action of the Treasury. For Exchange Fluctuations vide Chap, xxxi., “Trade Statistics.”
A Custom-house was established and port opened in Zamboanga (Mindanao Is.) for direct communication with abroad in 1831; those of Sual (Pangasinán) and Yloilo (Panay Is.) in 1855, and that of Cebú in 1863. The Custom-house of Sual was subsequently abolished, and the port having been closed to direct foreign trade, the place has lost its former importance, and lapsed into the state of a lifeless village.
Special permission could be obtained for ships to load in and sail direct from harbours where no Custom-houses were established, on a sum of money being lodged beforehand at the Caja de Depósitos in Manila, to cover duties, dues, etc., to be assessed.