The tonnage entered in Philippine ports shows a rapid annual increase in five years. Many new lines of steamers make Manila a port of call, exclusive of the army transports, carrying Government supplies, and in 1905 there was a regular goods and passenger traffic between Hong-Kong and Zamboanga. Still, the greater part of the freight between the Philippines and the Atlantic ports is carried in foreign bottoms. The shipping-returns for the year 1903 would appear to show that over 85 per cent, of the exports from the Islands to America, and about the same proportion of the imports from that country (exclusive of Government stores brought in army transports) were borne in foreign vessels. The carrying-trade figures for 1904 were 78.41 per cent, in British bottoms; 6.69 per cent, in Spanish, and 6.65 per cent, in American vessels. The desire to dispossess the foreigners of the carrying monopoly is not surprising, but it is thought that immediately-operative legislation to that end would be impracticable. The latest legislation on the subject confines the carrying-trade between the Islands and the United States to American bottoms from July 1, 1906. It is alleged that the success of the new regulations which may (or may not, for want of American vessels) come into force on that date will depend on the freights charged; it is believed that exorbitant outward rates would divert the hemp cargoes into other channels, and a large rise in inward freights would facilitate European competition in manufactured goods. Any considerable rise in freights to America would tend to counterbalance the benefits which the Filipinos hope to derive from the free entry of sugar and tobacco into American ports. The text of the Shipping Law, dated April 15, 1904, reads thus; “On and after July 1, 1906, no merchandise shall be transported by sea, under penalty of forfeiture thereof, between ports of the United States and ports or places of the Philippine Archipelago, directly, or via a foreign port, or for any part of the voyage in any other than a vessel of the United States. No foreign vessel shall transport passengers between ports of the United States and ports or places in the Philippine Archipelago, either directly, or via a foreign port, under a penalty of $200 for each passenger so transported and landed.”
The expenses of the Civil Government are met through the insular revenues (the Congressional Relief Fund being an extraordinary exception). The largest income is derived from the Customsʼ receipts, which in 1904 amounted to about $8,750,000, equal to about two-thirds of the insular treasury revenue (as distinguished from the municipal). The total Revenue and Expenditure in the fiscal year 1903 (from all sources, including municipal taxes expended in the respective localities, but exclusive of the Congressional Relief Fund) stood thus:—
| Total Revenue | $14,640,988 | |
| Total Expenditure | $15,105,374 | |
| Excess of Expenditure over Revenue | 464,386 | |
| 15,105,374 | 15,105,374 |
In 1903, therefore, Government cost the inhabitants the equivalent of about 46 per cent, of the exportsʼ value, against 45 per cent, in Spanish times, taking the relative averages of 1890–94. The present abnormal pecuniary embarrassment of the people is chiefly due to the causes already explained, and perhaps partly so to the fact that the ₱30,000,000 to ₱40,000,000 formerly in circulation had two to three times the local purchasing value that pesos have to-day.
The “Cooper Bill,” already referred to, authorizes the Insular Government to issue bonds for General Public Works up to a total of $5,000,000, for a term of 30 years, at 4½ per cent, interest per annum; and the municipalities to raise loans for municipal improvements up to a sum not exceeding 5 per cent. of the valuation of the real estate of the municipalities, at 5 per cent. interest per annum. For the purchase of the friarsʼ lands a loan of $7,000,000 exists, bearing interest at 4 per cent. per annum, the possible interest liability on the total of these items amounting to about $2,000,000 per annum.
On November 15, 1901, the high Customs tariff then in force was reduced by about 25 per cent. on the total average, bringing the average duties to about 17 per cent. ad valorem, but this was again amended by the new tariff laws of May 3, 1905. Opium is still one of the imports, but under a recent law its introduction is to be gradually restricted by tariff until March 1, 1908, from which date it will be unlawful to import this drug, except by the Government for medicinal purposes only.
On August 1, 1904, a new scheme of additional taxation came into force under the “Internal Revenue Law of 1904.” This tax having been only partially imposed during the first six months, the full yield cannot yet be ascertained, but at the present rate(₱5,280,970.96, partial yield for the fiscal year 1905) it will probably produce at the annual rate of $4,250,000 gold, which, however, is not entirely extra taxation, taking into account the old taxes repealed under Art. XVII., sec. 244. The theory of the new scheme was that it might permit of a lower Customs tariff schedule. The new taxes are imposed on distilled spirits, fermented liquors, manufactured tobacco, matches, banks and bankers, insurance companies, forestry products, valid mining concessions granted prior to April 11, 1899, business, manufactures, occupations, licences, and stamps on specified objects (Art. II., sec. 25). Of the taxes accruing to the Insular Treasury under the above law, 10 per cent. is set apart for the benefit of the several provincial governments, apportioned pro rata to their respective populations as shown by the census of 1903; 15 per cent. for the several municipal governments, provided that of this sum one-third shall be utilized solely for the maintenance of free public primary schools and expenditure appertaining thereto. In the aforesaid distribution Manila City ranks as a municipality and a province, and receives apportionment under this law on the basis of 25 per cent. (Art. XVII., sec. 150).
From the first announcement of the projected law up to its promulgation the public clamoured loudly against it. For months the public organs, issued in Spanish and dialect, persistently denounced it as a harbinger of ruin to the Colony. Chambers of Commerce, corporations and private firms, foreign and native, at meetings specially convened to discuss the new law, predicted a collapse of Philippine industry and commerce. At a public conference, held before the Civil Commission on June 24, 1904, it was stated that one distillery alone would have to pay a yearly tax of ₱744,000, and that a certain cigar-factory would be required to pay annually ₱557,425. Petitions against the coming law were sent by all the representative trading-bodies to the Insular Government praying for its withdrawal. When the Commissioners retired to their hill-station at Báguio (Benguet) they were followed up by protests against the measure, but it became law under Philippine Commission Act No. 1189. Since the imposition of this tax there has been a general complaint throughout the civilized provinces of depression in the internal trade, but to what extent it is justified there is no available precise data on which to form an estimate.
As already stated, the American occupation brought about a rapid rise in the price of everything, not of necessity or in obedience to the law of supply and demand, but because it was the pleasure of the Americans voluntarily to enhance established values. To the surprise of the Filipinos, the new-comers preferred to pay wages at hitherto unheard-of rates, whilst the soldiers lavishly paid in gold for silver-peso value (say, at least, double), of their own volition—an innovation in which the obliging native complacently acquiesced, until it dawned upon him that he might demand anything he chose. The soldiers so frequently threw away copper coin given them in change as valueless, that many natives discontinued to offer it. It followed that everybody was reluctantly compelled to pay the higher price which the American spontaneously elected to give. Labour, food, house-rent, and all the necessaries of life rose enormously.[3] The Colony soon became converted from a cheap into an expensive place of residence. Living there to-day costs at least three times what it did in Spanish times. Urban property and lands were assessed at values far beyond those at which the owners truly estimated them. Up to 1904 it was not at all uncommon to find the rent of a house raised to five times that of 1898. Retailers had to raise their prices; trading-firms were obliged to increase their clerksʼ emoluments, and in every direction revenue and expenditure thenceforth ranged on an enhanced scale. It is remarkable that, whilst pains were taken by the new-comers to force up prices, many of them were simultaneously complaining of expensive living! Governor W. H. Taft, with an annual emolument of $20,000 gold, declared before the United States Senate that the Gov.-Generalʼs palace at Malacañan was too expensive a place for him to reside in. The lighting of the establishment cost him $125 gold a month, and his servantsʼ wages amounted to $250 monthly. He added that he would rather pay his own rent than meet the expenses of the Malacañan residence.[4]