Customhouse red tape.The customs inspection, and the many formalities which the native minor officials exercised without any consideration appear all the more wearisome to the new arrival when contrasted with the easy routine of the English free ports of the east he has just quitted. The guarantee of a respectable merchant obtained for me, as a particular favor, permission to disembark after a detention of sixteen hours; but even then I was not allowed to take the smallest article of luggage on shore with me.

Shelter for shipping.During the south-west monsoon and the stormy season that accompanies the change of monsoons, the roadstead is unsafe. Larger vessels are then obliged to seek protection in the port of Cavite, seven miles further down the coast; but during the north-east monsoons they can safely anchor half a league from the coast. All ships under three hundred tons burden pass the breakwater and enter the Pasig, where, as far as the bridge, they lie in serried rows, extending from the shore to the middle of the stream, and bear witness by their numbers, as well as by the bustle and stir going on amongst them, to the activity of the home trade.

Silting up of river mouth.In every rain-monsoon, the Pasig river sweeps such a quantity of sediment against the breakwater that just its removal keeps, as it seems, the dredging machine stationed there entirely occupied.

Few foreign vessels.The small number of the vessels in the roadstead, particularly of those of foreign countries, was the more remarkable as Manila was the only port in the Archipelago that had any commerce with foreign countries. It is true that since 1855 three other ports, to which a fourth may now be added, had gotten this privilege; but at the time of my arrival, in March, 1859, not one of them had ever been entered by a foreign vessel, and it was a few weeks after my visit that the first English ship sailed into Iloilo to take in a cargo of sugar for Australia.1

Antiquated restrictions on trade.The reason of this peculiarity laid partly in the feeble development of agriculture, in spite of the unexampled fertility of the soil, but chiefly in the antiquated and artificially limited conditions of trade. The customs duties were in themselves not very high. They were generally about seven per cent. upon merchandise conveyed under the Spanish flag, and about twice as much for that carried in foreign bottoms. When the cargo was of Spanish production, the duty was three per cent. if carried in national vessels, eight per cent. if in foreign ships. The latter were only allowed, as a rule, to enter the port in ballast.2Discouragements for foreign ships.As, however, the principal wants of the colony were imported from England and abroad, these were either kept back till an opportunity occurred of sending them in Spanish vessels, which charged nearly a treble freight (from £4 to £5 instead of from £1½, to £2 per ton), and which only made their appearance in British ports at rare intervals, or they were sent to Singapore and Hongkong, where they were transferred to Spanish ships. Tonnage dues were levied, moreover, upon ships in ballast, and upon others which merely touched at Manila without unloading or taking in fresh cargo; and, if a vessel under such circumstances landed even the smallest parcel, it was no longer rated as a ship in ballast, but charged on the higher scale. Vessels were therefore forced to enter the port entirely devoid of cargo, or carrying sufficient to cover the expense of the increased harbor dues; almost an impossibility for foreign ships, on account of the differential customs rates, which acted almost as a complete prohibition. The result was that foreign vessels came there only in ballast, or when summoned for some particular object.

Export taxes.The exports of the colony were almost entirely limited to its raw produce, which was burdened with an export duty of three per cent. Exports leaving under the Spanish flag were only taxed to the amount of one per cent.; but, as scarcely any export trade existed with Spain, and as Spanish vessels, from their high rates of freight, were excluded from the carrying trade of the world, the boon to commerce was a delusive one.3

Laws drove away trade.These inept excise laws, hampered with a hundred suspicious forms, frightened away the whole carrying trade from the port; and its commission merchants were frequently unable to dispose of the local produce. So trifling was the carrying trade that the total yearly average of the harbor dues, calculated from the returns of ten years, barely reached $10,000.

Manila’s favorable location.The position of Manila, a central point betwixt Japan, China, Annam, the English and Dutch ports of the Archipelago and Australia, is in itself extremely favorable to the development of a world-wide trade.4 At the time of the north-eastern monsoons, during our winter, when vessels for the sake of shelter pass through the Straits of Gilolo on their way from the Indian Archipelago to China, they are obliged to pass close to Manila. They would find it a most convenient station, for the Philippines, as we have already mentioned, are particularly favorably placed for the west coast of America.

The 1869 reform.A proof that the Spanish Ultramar minister fully recognizes and appreciates these circumstances appears in his decree, of April 5, 1869, which is of the highest importance for the future of the colony. It probably would have been issued earlier had not the Spanish and colonial shipowners, pampered by the protective system, obstinately struggled against an innovation which impaired their former privileges and forced them to greater activity.

Bettered conditions.The most noteworthy points of the decree are the moderation of the differential duties, and their entire extinction at the expiration of two years; the abrogation of all export duties; and the consolidation of the more annoying port dues into one single charge.

Pre-Spanish foreign commerce.When the Spaniards landed in the Philippines they found the inhabitants clad in silks and cotton stuffs, which were imported by Chinese ships to exchange for gold-dust, sapan wood,5 holothurian, edible birds’ nests, and skins. The Islands were also in communication with Japan, Cambodia, Siam,6 the Moluccas, and the Malay Archipelago. De Barros mentions that vessels from Luzon visited Malacca in 1511.7

Early extension under Spain.The greater order which reigned in the Philippines after the advent of the Spaniards, and still more the commerce they opened with America and indirectly with Europe, had the effect of greatly increasing the Island trade, and of extending it beyond the Indies to the Persian Gulf. Manila was the great mart for the products of Eastern Asia, with which it loaded the galleons that, as early as 1565, sailed to and from New Spain (at first to Navidad, after 1602 to Acapulco), and brought back silver as their principal return freight.8

Jealousy of Seville monopolists.The merchants in New Spain and Peru found this commerce so advantageous, that the result was very damaging to the exports from the mother country, whose manufactured goods were unable to compete with the Indian cottons and the Chinese silks. The spoilt monopolists of Seville demanded therefore the abandonment of a colony which required considerable yearly contributions from the home exchequer, which stood in the way of the mother country’s exploiting her American colonies, and which let the silver of His Majesty’s dominions pass into the hands of the heathen. Since the foundation of the colony they had continually thrown impediments in its path.9 Their demands, however, were vain in face of the ambition of the throne and the influence of the clergy; rather, responding to the views of that time the merchants of Peru and New Spain were forced, in the interests of the mother country, to obtain merchandise from China, either directly, or through Manila. The inhabitants of the Philippines were alone permitted to send Chinese goods to America, but only to the yearly value of $250,000. The return trade was limited to $500,000.10

Prohibition of China trading.The first amount was afterwards increased to $300,000, with a proportionate augmentation of the return freight; but the Spanish were forbidden to visit China, so that they were obliged to await the arrival of the junks. Finally, in 1720, Chinese goods were strictly prohibited throughout the whole of the Spanish possessions in both hemispheres. A decree of 1734 (amplified in 1769) once more permitted trade with China, and increased the maximum value of the annual freightage to Acapulco to $500,000 (silver) and that of the return trade to twice the amount.

Higher limit on suspension of galleon voyages.After the galleons to Acapulco, which had been maintained at the expense of the government treasury, had stopped their voyages, commerce with America was handled by merchants who were permitted in 1820, to export goods up to $750,000 annually from the Philippines and to visit San Blas, Guayaquil and Callao, besides Acapulco.

British occupation inspired new wants.This concession, however, was not sufficient to compensate Philippine commerce for the injuries it suffered through the separation of Mexico from Spain. The possession of Manila by the English, in 1762, made its inhabitants acquainted with many industrial products which the imports from China and India were unable to offer them. To satisfy these new cravings Spanish men-of-war were sent, towards the close of 1764, to the colony with products of Spanish industries, such as wine, provisions, hats, cloth, hardware, and fancy articles.

Manila oppositions to trade innovations.The Manila merchants, accustomed to a lucrative trade with Acapulco, strenuously resisted this innovation, although it was a considerable source of profit to them, for the Crown purchased the Indian and Chinese merchandise for its return freights from Manila at double their original value. In 1784, however, the last of these ships arrived.

Subterfuges of European traders.After the English invasion, European vessels were strictly forbidden to visit Manila; but as that city did not want to do without Indian merchandise, and could not import it in its own ships, it was brought there in English and French bottoms, which assumed a Turkish name, and were provided with an Indian sham-captain.

The “Philippine Company” monopoly.In 1785, the CompaÑÍa de Filipinas obtained a monopoly of the trade between Spain and the colony, but it was not allowed to interfere with the direct traffic between Acapulco and Manila. The desire was to acquire large quantities of colonial produce, silk, indigo, cinnamon, cotton, pepper, etc., in order to export it somewhat as was done later on by the system of culture in Java; but as it was unable to obtain compulsory labor, it entirely failed in its attempted artificial development of agriculture.

Losses by bad management.The CompaÑÍa suffered great losses through its erroneous system of operation, and the incapacity of its officials (it paid, for example, $13.50 for a picul of pepper which cost from three to four dollars in Sumatra).

Entrance of foreign ships and firms.In 1789 foreign ships were allowed to import Chinese and Indian produce, but none from Europe. In 1809 an English commercial house obtained permission to establish itself in Manila.11 In 1814, after the conclusion of the peace with France, the same permission, with greater or less restrictions, was granted to all foreigners.

Trade free but port charges discriminating. In 1820 the direct trade between the Philippines and Spain was thrown open without any limitations to the exports of colonial produce, on the condition that the value of the Indian and Chinese goods in each expedition should not exceed $50,000. Ever since 1834, when the privileges of the CompaÑÍa expired, free trade has been permitted in Manila; foreign ships, however, being charged double dues. Four new ports have been thrown open to general trade since 1855; and in 1869 the liberal tariff previously alluded to was issued.

Port’s importance lessened under Spain. Today, after three centuries of almost undisturbed Spanish rule, Manila has by no means added to the importance it possessed shortly after the advent of the Spaniards. The isolation of Japan and the Indo-Chinese empires, a direct consequence of the importunities and pretensions of the Catholic missionaries,12 the secession of the colonies on the west coast of America, above all the long continuance of a distrustful commercial and colonial policy—a policy which exists even at the present day—while important markets, based on large capital and liberal principles, were being established in the most favored spots of the British and Dutch Indies; all these circumstances have contributed to this result and thrown the Chinese trade into other channels. The cause is as clear as the effect, yet it might be erroneous to ascribe the policy so long pursued to short-sightedness. The Spaniards, in their schemes of colonization, had partly a religious purpose in view, but the government discovered a great source of influence in the disposal of the extremely lucrative colonial appointments. The crown itself, as well as its favorites, thought of nothing but extracting the most it could from the colony, and had neither the intention or the power to develop the natural wealth of the country by agriculture and commerce. Inseparable from this policy, was the persistent exclusion of foreigners.13 It seemed even more necessary in the isolated Philippines than in America to cut off the natives from all contact with foreigners, if the Spaniards had any desire to remain in undisturbed possession of the colony. In face, however, of the developed trade of today and the claims of the world to the productive powers of such an extraordinarily fruitful soil, the old restrictions can no longer be maintained, and the lately-introduced liberal tariff must be hailed as a thoroughly well-timed measure.

Galleon story sidelight on colonial history. The oft-mentioned voyages of the galleons betwixt Manila and Acapulco hold such a prominent position in the history of the Philippines, and afford such an interesting glimpse into the old colonial system, that their principal characteristics deserve some description.

Chinese part in galleon trade. In the days of Morga, towards the close of the sixteenth century, from thirty to forty Chinese junks were in the habit of annually visiting Manila (generally in March); towards the end of June a galleon used to sail for Acapulco. The trade with the latter place, the active operations of which were limited to the three central months of the year, was so lucrative, easy, and safe, that the Spaniards scarcely cared to engage in any other undertakings.

Favoritism in allotment of cargo space. As the carrying power of the annual galleon was by no means proportioned to the demand for cargo room, the governor divided it as he deemed best; the favorites, however, to whom he assigned shares in the hold, seldom traded themselves, but parted with their concessions to the merchants.

Division of space and character of cargo.According to De Guignes,14 the hold of the vessel was divided into 1,500 parts, of which the majority were allotted to the priests, and the rest to favored persons. As a matter of fact, the value of the cargo, which was officially limited to $600,000, was considerably higher. It chiefly consisted of Indian and Chinese cottons and silk stuffs (amongst others fifty thousand pairs of silk stockings from China), and gold ornaments. The value of the return freight amounted to between two and three millions of dollars.

Profit in trade.Everything in this trade was settled beforehand; the number, shape, size, and value of the bales, and even their selling price. As this was usually double the original cost, the permission to ship goods to a certain amount was equivalent, under ordinary circumstances, to the bestowal of a present of a like value. These permissions or licenses (boletas) were, at a later period, usually granted to pensioners and officers’ widows, and to officials, in lieu of an increase of salary; these favorites were forbidden, however, to make a direct use of them, for to trade with Acapulco was the sole right of those members of the Consulado (a kind of chamber of commerce) who could prove a long residence in the country and the possession of a capital of at least $8,000.

Evasion of regulations.Legentil, the astronomer, gives a full description of the regulations which prevailed in his day and the manner in which they were disobeyed. The cargo consisted of a thousand bales, each composed of four packets,15 the maximum value of each packet being fixed at $250. It was impossible to increase the amount of bales, but they pretty generally consisted of more than four packets, and their value so far exceeded the prescribed limits, that a boleta was considered to be worth from $200 to $225. The officials took good care that no goods should be smuggled on board without a boleta. These were in such demand, that, at a later period, Comyn16 saw people pay $500 for the right to ship goods, the value of which scarcely amounted to $1,000. The merchants usually borrowed the money for these undertakings from the obras pias, charitable foundations, which, up to our own time, fulfil in the Islands the purposes of banks.17 In the early days of the trade, the galleon used to leave Cavite in July and sail with a south-westerly wind beyond the tropics, until it met with a west wind at the thirty-eighth or Route outward. fortieth parallel.18 Later on the vessels were ordered to leave Cavite with the first south-westerly winds to sail along the south coast of Luzon, through San Bernardino straits, and to continue along the thirteenth parallel of north latitude19 as far to the east as possible, until the north-easterly trade wind compelled them to seek a north-west breeze in higher latitudes. They were then obliged to try the thirtieth parallel as long as possible, instead of, as formerly, the thirty-seventh. The captain of the galleon was not permitted to sail immediately northward, although to have done so would have procured him a much quicker and safer passage, and would have enabled him to reach the rainy zone more rapidly. To effect the last, indeed, was a matter of the greatest importance to him, for his vessel, overladen Water-supply crowded out by cargo. with merchandise, had but little room crowded out for water; and although he had a crew of from four hundred to six hundred hands to provide for, he was instructed to depend upon the rain he caught on the voyage; for which purpose, the galleon was provided with suitable mats and bamboo pails.20

Length of voyage.Voyages in these low latitudes were, owing to the inconstancy of the winds, extremely troublesome, and often lasted five months and upwards. The fear of exposing the costly, cumbrous vessel to the powerful and sometimes stormy winds of the higher latitudes, appears to have been the cause of these sailing orders.California landfall.As soon as the galleon had passed the great Sargasso shoal, it took a southerly course, and touched at the southern point of the Californian peninsula (San Lucas), where news and provisions awaited it.21 In their earlier voyages, however, they must have sailed much further to the north, somewhere in the neighborhood of Cape Mendocino, and have been driven southward in sight of the coast; for Vizcaino, in the voyage of discovery he undertook in 1603, from Mexico to California, found the principal mountains and capes, although no European had ever set his foot upon them, already christened by the galleons, to which they had served as landmarks.22

Speedy return voyage.The return voyage to the Philippines was an easy one, and only occupied from forty to sixty days.23 The galleon left Acapulco in February or March, sailed southwards till it fell in with the trade wind (generally in from 10° to 11° of north latitude), which carried it easily to the Ladrone Islands, and thence reached Manila by way of Samar.24

Galleon’s size and armament.A galleon was usually of from twelve hundred to fifteen hundred tons burden, and carried fifty or sixty guns. The latter, however, were pretty generally banished to the hold during the eastward voyage. When the ship’s bows were turned towards home, and there was no longer any press of space, the guns were remounted.

Capture of “Santa Anna”.San Augustin says of the Santa Anna, which Thomas Candish captured and burnt in 1586 off the Californian coast: “Our people sailed so carelessly that they used their guns for ballast; .... the pirate’s venture was such a fortunate one that he returned to London with sails of Chinese damask and silken rigging.” The cargo was sold in Acapulco at a profit of 100 per cent., and was paid for in silver, cochineal, quicksilver, etc. Value of return freight The total value of the return freight amounted perhaps to between two and three million dollars,25 of which a quarter of a million, at least, fell to the king.

Gambling rather than commerceThe return of a galleon to Manila, laden with silver dollars and new arrivals, was a great holiday for the colony. A considerable portion of the riches they had won as easily as at the gaming table, was soon spent by the crew; when matters again returned to their usual lethargic state. It was no unfrequent event, however, for vessels to be lost. They were too often laden with a total disregard to seaworthiness, and wretchedly handled. It was favor, not capacity, that determined the patronage of these lucrative appointments.26 Many galleons fell into the hands of English and Dutch cruisers.27 “Philippine Company” and smugglers cause change.But these tremendous profits gradually decreased as the CompaÑÍa obtained the right to import Indian cottons, one of the principal articles of trade, into New Spain by way of Vera Cruz, subject to a customs duty of 6 per cent; and when English and American adventurers began to smuggle these and other goods into the country.28 Spanish coins in circulation on China coast.Finally, it may be mentioned that Spanish dollars found their way in the galleons to China and the further Indies, where they are in circulation to this day.