Manila tobacco handicapped.According to Agius (“Memoria,” 1871), in the European market the Manila tobacco was admitted to be without any rival, with the sole exception of the Vuelta abajo of Cuba; and most certainly in the Asiatic and Oceanic ports its superior quality was undisputed, as the Havana tobacco loses its flavor on the long voyage to these countries; but now, from year to year, it is surely losing its reputation. If, then, the Manila cigars have not hitherto succeeded in making themselves acceptable in Europe on account of their inferiority, the blame is attributable simply to the system of compulsory labor, and the chronic insolvency of the Insular Treasury, whilst the produce of other tobacco countries has steadily progressed in quality in consequence of free competition. The fame of the Manila cigars may also have suffered in some slight measure from the wide-spread, though perfectly erroneous, idea that they contained opium.
Hampered by government restrictions.How greatly the produce might be increased by means of free trade is shown under other circumstances by the example of Cuba. At the time when the Government there monopolized the tobacco trade, the crops were only partly sufficient to cover the home consumption; whereas, at the present time, Cuba supplies all the markets of the world.[6] The decision of Captain-General De la Gandara upon this question is in the highest degree worthy of notice. In a MS. Report to the Colonial Minister, March, 1858, concerning a measure for rendering the regulations of the tobacco monopoly still more stringent, he says: “If the tobacco cultivation is placed without restriction into the hands of private traders, we shall most probably, in a few years, be in a position to command nearly all the markets in the world.” Most of the islands produce tobacco. According to the quality of the produce, the tobacco provinces rank in the following order: First, Cagayan and Isabela; Second, Igorots; Third, Island of Mindanao; Fourth, Bisayas; Fifth, Nueva Ecija.
Origin of monopoly.From the Government Order, dated November 20, 1625, it is evident that even at that early period the sale of betel nut, palm spirit (toddy), tobacco, etc., was a Government monopoly: but it does not seem to have been very strictly carried out. The tobacco monopoly, as it stands at present, the whole trade of which from the sowing of the seedling plants to the sale of the manufactured article is exclusively in the hands of the Government, was first introduced by Captain-General José Basco y Vargas. And a Government Order, under date of January 9, 1780 (confirmed by Departmental Regulations, December 13, 1781), further enacted that the tobacco regulations should be extended to the Philippine Islands, in like manner as in all Spanish possessions in this and the other hemisphere (de uno y otto mundo).
Governor Basco’s innovations.Before the administration of this very jealous Governor, for a period of two hundred years the colony received annual contributions from New Spain (Situado de Nueva España). In order to relieve the Spanish Exchequer, from this charge Basco introduced (at that time national economic ideas prevailed of making the natural resources of a State supply its immediate wants) a plan upon which, fifty years later, Java modelled its “Culture System.” In the Philippines, however, the conditions for this system were less favorable. In addition to the very slight submissiveness of the population, there were two great obstacles in the opposition of the priests and the want of trustworthy officials. Of all the provincial trades brought into existence by the energy of Basco, the indigo cultivation is the only one that remains in the hands of private individuals, the tobacco trade still being a Government monopoly.[7] Basco first of all confined the monopoly to the provinces immediately contiguous to the capital, in all of which the cultivation of tobacco was forbidden under penalty of severe punishment, except by persons duly authorized and in the service of the Government.[8] In the other provinces the cultivation was to a certain extent permitted; but the supply remaining after deduction of what was consumed in each province was to be sold to the Government only.
Speculation with public funds.In the Bisayas the magistrates purchased the tobacco for the Government and paid for it at the rate previously fixed by the Government factories at Manila; and they were allowed to employ the surplus money of the Government treasury chest for this purpose. A worse system than this could scarcely be devised. Officials, thinking only of their own private advantage, suffered no competition in their provinces, employed their official power to oppress the producer to the utmost extent, and thereby naturally checked the production; and the Government treasury chest consequently suffered frequent losses through bankruptcies, inasmuch as the magistrates, who drew a salary of $600 and paid a license of from $100 to $300 for the right of trading, in order to make money quickly, engaged in the most hazardous speculations. In 1814 this stupid arrangement was first put an end to; and forthwith the tobacco supplies from the Bisayas increased, through the competition of the private dealers, who then, for the first time, had the power of purchase; and from 1839 the planters were empowered to obtain higher prices than those afforded by the greedy monopolizing magistrates. At present, the following general regulations are in force, subject, however, to continual variation in details.
Changes bring improvement.By a Departmental Order, September 5, 1865, the cultivation of tobacco was permitted in all the provinces, though the produce was allowed to be sold only to the Government at the price regulated by them. The wholesale purchases are made in Luzon and the adjacent islands in fardos,[9] by “colleccion,” that is, direct through the finance officials, who have the management of the plants from the sowing; but in the Bisayas by acopio; that is, the Government officials buy up the tobacco tendered by the growers or speculators by the cwt.
Different usages in Bisayas and Mindanao.In the Bisayas and in Mindanao everybody is allowed to manufacture cigars for his own particular use, though trade therein is strictly prohibited; and advances to the tobacco growers are also made there; while in Luzon and the neighboring islands the Government provides seed and seedling plants. Here, however, no land which is adapted to the cultivation of tobacco is allowed to be used for any other purpose of agriculture.
Crude system of grading.As the Financial Administration is unable to classify the tobacco at its true value, as might be done were free competition permitted, they have adopted the expedient of determining the price by the size of the leaves; the care necessary to be bestowed upon the training of the plants in order to produce leaves of the required size being at least a guarantee of a certain amount of proper attention and handling, even if it be productive of no other direct good.[10]
Burden knowingly increased.It is well known at Madrid how the tobacco monopoly, by oppressing the wretched population, interferes with the prosperity of the colony; yet, to the present day, the Government measures have been so arranged as to exact a still larger gain from this very impolitic source of revenue.
“Killing the goose that lays the golden egg.”A Government Order of January, 1866, directed the tobacco cultivation in the Philippines to be extended as much as possible, in order to satisfy the requirements of the colony, the mother country, and also the export trade; and in the memorial already quoted, “reforms” are proposed by the Captain-General, in the spirit of the goose with golden eggs. By grafting new monopolies upon those already existing, he believes that the tobacco produce can be increased from 182,102 cwt. (average of the years 1860 to 1857) to 500,000, and even 800,000 cwt. Meantime, with a view to obtaining increased prices, the Government resolved to export the tobacco themselves to the usual markets for sale; and in the year 1868 this resolution was really carried out. It was sent to London, where it secured so favorable a market that it was at once decreed that no tobacco in Manila should thenceforth be sold at less than $25 per cwt.[12] This decree, however, referred only to the first three qualities, the quantity of which decreased in a relative measure with the increased pressure upon the population. Even in the table annexed to the record of La Gandara this is very clearly shown. Whilst the total produce for 1867 stood at 176,018 cwt. (not much under the average of the years 1860 to 1857, viz., 182,102 cwt.), the tobacco of the first class had decreased in quantity since 1862 from over 13,000 to less than 5,000 cwt.