At length, during the government of General Domingo Moriones (1877–80), it was resolved to listen to the overwhelming complaints from the North, and pay up to date in coin. But, to do this, Spain, always in a state of chronic insolvency, had to resort to an abominable measure of disloyalty. The funds of the Deposit Bank (Caja de Depósitos) were arbitrarily appropriated, and the deposit-notes, bearing 8 per cent. interest per annum, held by private persons, most of whom were Government clerks, etc., were dishonoured at due date. This gave rise to great clamour on the part of those individuals whose term of service had ceased (cesantes), and who, on their return to Spain, naturally wished to take their accumulated savings with them. The Gov.-General had no other recourse open to him but to reinstate them in their old positions, on his own responsibility, pending the financial crisis and the receipt of instructions from the Government at Madrid.
For a long time the question of abolishing the Monopoly had been debated, and by Royal Order of May 20, 1879, a commission was appointed to inquire into the convenience of farming out the tobacco traffic. The natives were firmly opposed to it; they dreaded the prospect of the provinces being overrun by a band of licensed persecutors, and of the two evils they preferred State to private Monopoly. Warm discussions arose for and against it through the medium of the Manila newspapers. The “Consejo de Filipinas,” in Madrid, had given a favourable report dated May 12, 1879, and published in the Gaceta de Madrid of July 13, 1879. The clergy defeated the proposal by the Corporations of Friars jointly presenting a Memorial against it—and it was thenceforth abandoned. The Tobacco Monopoly was the largest source of public revenue, hence the doubt as to the policy of free trade and the delay in granting it. There existed a possibility of the Treasury sustaining an immense and irretrievable loss, for a return to Monopoly, after free trade had been allowed, could not for a moment be thought of. It was then a safe income to the Government, and it was feared by many that the industry, by free labour, would considerably fall off.
As already stated, the Government Monopoly ceased on December 31, 1882, when the tobacco cultivation and trade were handed over to private enterprise. At that date there were five Government Cigar and Cigarette Factories, viz.:—Malabon, Arroceros, Meisig, El Fortin, and Cavite, giving employment to about 20,000 operatives.
Up to within a year of the abolition of Monopoly, a very good smokeable cigar could be purchased in the estancos[7] from one half-penny and upwards, but as soon as the free trade project was definitely decided upon, the Government factories, in order to work off their old stocks of inferior leaf, filled the estancos with cigars of the worst quality.
The Colonial Treasurer-General at the time of this reform entertained very sanguine hopes respecting the rush which would be made for the Government brands, and the general public were led to believe that a scarcity of manufactured tobacco would, for some months, at least, follow the establishment of free trade in this article. With this idea in view, Government stocks sold at auction aroused competition and fetched unusually high prices at the close of 1882 and the first month of the following year, in some cases as much as 23/– per cwt. being realized over the upset prices. However, the Treasurer-General was carried too far in his expectations. He was unfortunately induced to hold a large amount of Government manufactured tobacco in anticipation of high offers, the result being an immense loss to the Treasury, as only a part was placed, with difficulty, at low prices, and the remainder shipped to Spain. In January, 1883, the stock of tobacco in Government hands amounted to about 100 tons of 1881 crop, besides the whole crop of 1882. Little by little the upset prices had to be lowered to draw buyers. The tobacco shipped during the first six months of the year 1883 was limited to that sold by auction out of the Government stocks, for the Government found themselves in a dilemma with their stores of this article, and the free export only commenced half a year after free production was granted. On December 29, 1883, a Government sale by auction was announced at 50 per cent. reduction on their already low prices, but the demand was still very meagre. Finally, in the course of 1884, the Government got rid of the bulk of their stock, the balance being shipped to the mother country. The colonial authorities continued to pay the ancient tobacco-tribute to Spain, and the first contract, with this object, was made during that year with a private company for the supply of about 2,750 tons.
During the first year of Free Trade, cigar and cigarette factories were rapidly started in Manila and the provinces, but up to 1897 only some eight or ten factories had improved the quality of the manufactured article, whilst prices rose so considerably that the general public probably lost by the reform. Cigars, like those sold in the estancos in 1881, could never again be got so good for the same price, but at higher prices much better brands were offered.
A small tax on the cigar and tobacco-leaf trade, officially announced in August, 1883, had the beneficial effect of causing the closure of some of the very small manufactories, and reduced the probability of a large over-supply of an almost worthless article.
Export-houses continued to make large shipments of leaf-tobacco and cigars until the foreign markets were glutted with Philippine tobacco in 1883, and in the following years the export somewhat decreased. For figures of Tobacco Leaf and Cigar Shipments, vide Chap, xxxi., “Trade Statistics.”
As to the relative quality of Philippine tobacco, there are very divided opinions. Decidedly the best Manila cigars cannot compare with those made from the famous leaf of the Vuelta de Abajo (Cuba), and in the European markets they have very justly failed to meet with the same favourable reception as the Cuban cigars generally.
During my first journey up the Cagayán River, I was told that some years ago the Government made earnest efforts to improve the quality of the plant by the introduction of seed from Cuba, but unfortunately it became mixed up with that usually planted in the Philippine provinces, and the object in view failed completely. On my renewed visit to the tobacco districts, immediately after the abolition of monopoly, the importance of properly manipulating the green leaf did not appear to be thoroughly appreciated. The exact degree of fermentation was not ascertained with the skill and perseverance necessary to turn out a well-prepared article. Some piles which I tested were over-heated (taking the Java system as my standard), whilst larger quantities had been aërated so long in the shed, after cutting, that they had lost their finest aroma.