The revenue which supports the Filipinas Islands, which cannot be replaced by any other, and which if it were properly established and administered would yield incalculable advantages, is that from tobacco. Three millions of inhabitants, all without exception of sex or age consumers of that article—and for each one of them, on the average, and at a very low estimate, can be set down a consumption of four pesos [worth] a year—would produce an addition to the revenue of twelve million pesos, which they would obtain from the land and from their industries, in order to give at the same time a great impulse to commerce. This is not a paradox, for the use of tobacco is of so prime necessity for the Indians that the same calculation can be made for that object that would be made for the use of bread in España. [Bernaldez considers the injurious effects of enforcing this monopoly in only a part of the islands—“although more than half the population is today subject to the monopoly, its income is only one-tenth of what, at a reasonable estimate, it ought to be”—and those of its careless and negligent administration. He makes the following suggestions:] That the collection of the tributes from the Indians of Filipinas be made compulsory in money, as soon as the colonial money can be placed in circulation in their provinces. That the monopoly of tobacco in Filipinas be extended to all the [now] exempt provinces, without exception; and the government there will succeed much better in establishing it therein by sagacity than by authority or force. That the examination and appraisal of the leaf tobacco which the monopoly purchases from the growers be made before a board which the government there shall appoint annually, composed of officials from the capital who are most trustworthy and intelligent in that branch of administration, such tobacco as proves to be unfit for use being burned in their presence. That all the tobacco which can be collected in Filipinas be conveyed to España, by means of contracts with private persons for the freighting of ships; and with it the amount which can be remitted from the [different] branches of the royal exchequer, and the annual surplus of their funds.
Of the revenue from wine
The product of the revenue from wine cannot in Filipinas be considered so important as that from tobacco, because the Indians are very moderate in their drinking. The wines made from the cocoanut and nipa (the only ones subject to the monopoly) are wholesome for the Indians; and as the monopoly has regulated the supply for each village, greatly improving the process of making the liquor and diminishing its strength, the Indians prefer the monopoly to the free privilege of this article. The failure of this revenue to increase depends on two causes: first, that the monopoly is not extended, as it ought to be, to all the provinces of the islands, not only thus to place all the natives on the same footing, and so suppress the contraband trade, but to prevent by this method the manufacture by the Indians of other beverages which are more injurious to their health, and which, without giving them pleasure, intoxicate them as has been the case with the brandy and rum from sugar-cane juice or molasses; second, the great amount of the two last-named liquors which is clandestinely furnished to the public, as a result of the permission, very negligently guarded, which was given to manufacture them freely to export abroad, or to sell them under a certain tax in order that they should not injure the consumption of the article placed under monopoly control. [Bernaldez admits that the manufacture of the above-mentioned brandy and rum ought to be allowed, “because otherwise the country would lose the enormous quantity of molasses which results from the sugar-making, which has a considerable value, but cannot be employed for other uses;” but the government ought to maintain the value of the monopolized beverages, and at the same time facilitate the exportation of rum and brandy.[7] He recommends, besides the extension of the wine monopoly:] That, as a consequence, every other kind of beverage made in the country be prohibited in the islands for the common use of the Indians. That the manufacture of brandy and rum from sugar-cane be allowed only for the export trade. That each manufacturer be likewise allowed to have a retail warehouse, under the imposts which they now pay. That the manufacturers be compelled to establish their factories in the immediate vicinity of Manila, where they can and must be watched, at their own expense, by the revenue clerks. That all the brandy and rum which is made from sugar be immediately deposited in warehouses, the keys of which the custom-house shall take charge of, the government levying on it moderate duties for deposit as well as for export.[8]
Of the head-money, or personal tax, from the Chinese
[The Chinese were at first allowed in Filipinas only to cultivate the soil and work in handicrafts; but they have drawn into their possession the control of trade and commerce, “winning the good-will of the government and the tolerance of the inhabitants of Manila with a thousand intrigues unknown in the country. They have done in Filipinas what the Europeans ought to have done, that is, to acquire wealth and send it, or themselves go with it, to their own country to establish commercial houses;” and thus they have added a marvelous amount to the wealth of China. Their method of doing business is explained—practically the same as is done in the United States at the present time; united capital and effort, division of the gains accordingly, quick sales and small profits, etc. They have obtained the exclusive retail trade in Manila, and a great part of the wholesale trade, “and thereby have aroused the hostility of corporations and private persons, notwithstanding that they are a class of peaceable and industrious people in the country.” Bernaldez thinks that their tax of six pesos a year is much too small, considering the advantages which they enjoy and the large fortunes which they acquire in the islands; in Batavia the Chinese pay the government as much as thirty pesos a month for merely the permission to trade. The tax on them at Manila is farmed out to a Chinaman, and does not yield as much as it should. The following recommendations are made:] That measures be immediately taken to correct and render accurate the registration of the Chinese settled in Filipinas. That the individuals of that nation be divided into three classes: first, wholesale merchants, understanding by that term all those who embark for China and receive thence goods on commission or for their own account; second, retail merchants, or shopkeepers; third, artisans of every class. That these be distributed by groups under head-men [por cabecerias], which shall not exceed sixty individuals to each one. That every Chinaman, as soon as he is registered, shall be joined to one of these groups, the head-man becoming responsible for him. That these Chinese heads of barangay must give security for the tribute from those under them, and collect the tax and deliver it to the alcalde-mayor of their respective province, being responsible in every case for the residence and occupation of their tribute-payers; and for this commission collecting the three per cent. That in future the tax on the Chinese already settled and those who shall settle in Filipinas shall be as follows: the wholesale merchant, ten pesos fuertes a month; the retail merchant, four pesos ditto; the artisan of every class, two pesos ditto. That every Chinaman settled there shall be free to return to his own country, provided he is not married, the limit of six months being allowed for this. That the Chinaman, of whatever class, who shall not pay his respective tax within one year shall be sent and delivered up to one of the ranch-owners for compulsory labor [por repartimiento], in order that there he may work at the day-wages agreed upon, which must not fall below two reals a day and food-rations of rice; and that the ranchman shall with these wages pay the tax [due], at the rate of two pesos a month.
[Among the advantages derived from this arrangement will be that of sending out of the islands the many poor and useless Chinese who have been gradually multiplying there, and have been infecting the natives with their vices. It will even benefit the Chinese themselves, “who with two reals a day, which make 7½ dollars a month clear” (thus showing that Sunday labor was exacted), “can pay two pesos of tax and be exceedingly prosperous.”][9]
Of the custom-house duties
The royal decree of August 25, 1818, by which it was decided that the exaction of import and export duties should be made in the Manila custom-house from the owners of the vessels, without considering the ownership of their lading, and that if the vessel were Spanish it should pay three per cent, and if foreign six per cent, has been a special favor or privilege granted to half a dozen Spanish ship-owners (for those who conduct the commerce with China and Bengala cannot be more than that number), with serious loss to the exchequer. This is, of course, annually deprived of the considerable income of the three per cent rebate on all foreign goods imported into Manila, which is a direct benefit to the foreigners who own nearly all the commerce in those goods. The manufacturers of Filipinas, especially those of cotton fabrics—which are able to compete with, and even exceed in cheapness, those of China, since the cotton of which these are made is of their own raising—are being ruined, because that rebate of duties brings the prices of the Chinese goods so near to those of their infant industry that the former ought always to be preferred; and, finally, the above arrangement has also given opportunity for various frauds proceeding from the pretended sale of foreign vessels to Spaniards, solely for the purpose of availing themselves of the rebate of duties on their cargoes, and to the possession (under assumed names) by Chinese settled in Manila of Spanish vessels.
[Bernaldez states the considerations which should regulate these duties, and the following recommendations for the payment of duties on various classes of merchandise, this amount to cover in each case the entire exaction: On national goods in transit, carried to Manila—on a Spanish vessel, three per cent; on a foreign ship, six per cent. The same goods for consumption in the country shall pay nine and ten per cent respectively. On foreign goods from India and China, for domestic consumption, ten and fifteen per cent respectively; from this class should be excepted the wines, brandies, pig iron, small articles of cast iron, dry beans, and foreign paper, which should pay twenty and twenty-five per cent respectively. Goods, whether national or foreign, not declared as in transit at leaving Manila shall pay two and four per cent respectively; but those registered on a Spanish ship from India, China, and all Asia for España, ten per cent. Coined silver and gold, and silver bullion, shall pay no entrance duty at Manila, but on leaving that port shall pay three and six per cent respectively; and foreign gold in bullion shall pay eight per cent at entering Manila (whether on Spanish or foreign vessels). National products, and those of the industries of Filipinas, shall pay when exported eight per cent on a foreign vessel, but nothing on a Spanish ship. The duty of the merchant’s peso [peso marchante] which the municipality of Manila collects should be abolished as obstructive to commerce; for the legal origin of this imposition is unknown, and it is very unsuitable for a municipality which is rich through its rents, revenues, and imposts. Bernaldez believes that this tariff would promote agriculture, industry, and navigation, and benefit the royal treasury. More coin would be brought into the islands, the plan of exempting it from duties having been adopted for that purpose by all the other governments of Asia. The burden of these duties will fall mainly on the rich class, and not on the Indians. The “infant industries” [fabricas nacientes] will be protected, and the Spanish merchant marine will be given the advantage over the foreigners.]