The seed of the Tobacco-plant (Nicotiana tabacum) was among the many novelties introduced into the Philippines from Mexico by Spanish missionaries, soon after the possession of the Colony by the Spaniards was an accomplished fact. From this Colony it is said to have been taken in the 16th or 17th century into the south of China, where its use was so much abused that the sale of this so-called noxious article was, for a long time, prohibited under penalty of death.
During the first two centuries of Spanish dominion but little direct attention was paid to the tobacco question by the Government, who only nominally held, but did not assert, the exclusive right of traffic in this article. At length, in the year 1781, during the Gov.-Generalship of José Basco y Vargas (a naval officer), the cultivation and sale of tobacco was formally decreed a State monopoly, which lasted up to the end of the year 1882. In the meantime, it became an important item of public revenue. In 1882 the profits of the Tobacco Monopoly amounted to half the Colonyʼs Budget expenditure.
A few years before that date a foreign company offered to guarantee the Budget (then about ₱15,000,000), in exchange for the Tobacco Monopoly, but the proposal was not entertained, although in the same year the Treasury deficit amounted to ₱2,000,000.
By Royal Decree of July 1, 1844, a contract was entered into with the firm of OʼShea & Co., renting to them the Monopoly, but it was suddenly rescinded. The annual profits from tobacco to the Government at that date were about ₱2,500,000.
Government Profit
| 1840 | ₱2,123,505 |
| 1845 | 2,570,679 |
| 1850 | 3,036,611 |
| 1855 | 3,721,168 |
| 1859 | 4,932,463 |
| 1860 | over 5,000,000 |
| 1869 | 5,230,581 |
A bale of tobacco contains 4,000 leaves in 40 bundles (manos), of 100 leaves each.
The classification of the deliveries depended on the districts where the crop was raised and the length of the leaf.
The tobacco trade being also a Government concern in Spain, this Colony was required to supply the Peninsula State Factories with 90,000 quintals (of 100 Span, lbs.) of tobacco-leaf per annum.