Royal Philippine company

The various modifications this corporate body has successively experienced, have, in great measure, changed the essence of its original constitution, and the remonstrances of its directors, founded on the experience of a long series of years, at length induced the government at home to sanction alterations dictated by existing circumstances.

The project of raising these Islands from the neglected state in which they were, and in some measure to place them in contact with the mother country, accompanied by a wish to give a new and great impulse to the various branches of industry which constitute the importance of a colony, could not have been more laudable.

but, as was afterwards seen, the instrument employed was not adequate to the object in view. At the same time that the company were charged to promote, and, by means of their funds, to vivify the agriculture and industry of these provinces, the necessary powers and facilities to enable them to reap the fruits of their sacrifices were withheld. The protection granted to this establishment, did not go beyond a general recommendation in favor of its enterprises, and, in short, far from enjoying the exclusive preponderance obtained at their commencement by all the other Asiatic companies, that of the Philippine Islands labored under particular disadvantages.

Local progress under adverse conditions.Notwithstanding an organization so imperfect, scarcely had the agents of the new Company arrived at Manila, when they distributed through the country their numerous dependents, commissioned to encourage the natives by advances of money. They established subaltern factories in the Provinces of Ilocos, Bataan, Cavite, and Camarines; purchased lands; delivered out agricultural implements; founded manufacturies of cotton cloths; contracted for the crops of produce at very high prices; offered rewards and, in short, they put in motion every partial resources they were able to avail themselves of and their limited means allowed.

It would be extremely easy for me, in this place, to enter a particular enumeration of the important services of this kind rendered by the company, and to exhibit, in the most evident point of view, the advantages thence derived to these Islands, if, besides being slightly touched upon in the preceding articles, this task had not been already ably performed by the Factor Don Juan Francisco Urroz, in his accurate report on this subject, addressed to the governing committee of the company, in 1803. In justice I will nevertheless observe, that this establishment, anxiously resolved to attain the end proposed, in spite of so many obstacles, constantly followed up its expensive system without being disheartened; nor did the contrarieties with which the Royal Audiencia, or High Court of Justice, frequently paralyzed its plans, the indifference of the governors, or the general opposition and jealousy of the other classes, in any way tend to relax its efforts, till at length, convinced of the impossibility of successfully contending, alone and without any other arms than its own reduced capital; and, on the other hand, well aware that a political body of this kind in vain seeks to unite within itself the triple and opposite characters of agriculturalist, manufacturer, and merchant, a determination was taken to alter the plan, and withdraw the factories established in the provinces, and by adopting a rigid economy and confining the operations in future to the purchase of such produce and manufactured articles [388]as suited their trade, and were voluntarily brought by the natives to their stores, the expenses of the Company were curtailed, and a plan of reform introduced into all their speculations. By this means also they always secured an advantageous vent for the productions of the country, after having been the chief spring by which agriculture was promoted and encouraged in a direct manner.

Handicapped in outside tradeThe most beneficial reform, however, introduced by this establishment into its system, has, in reality, been derived from the variation or rather correction of its plans and enterprises, purely maritime. The government being desirous to increase the relations of this colony by every possible means, and to convert it into a common center of all the operations of the new company, at first required of the agents that the purchases and collection of goods from the coast of Coromandel, Bengal, and China, destined for Spain, should take place at Manila, either by purchasing the articles in that market, or through the medium of previous contracts to deliver them there. From this it is easy to infer, that the company was infallibly exposed to the harsh terms the respective contractors sought to impose upon them, as well with regard to prices as qualities, unless, in many cases, they preferred being left without the necessary assortments. Hence may it, without the smallest exaggeration, be affirmed, that, summing up all the surcharges under which the shipments left the port of Manila, and comparing them with those which might have been sent direct from the above-mentioned points, and without so extraordinary a détour as the one prescribed by law, the difference that followed in the prime cost of the cargos was not less than 80 per cent. The urgent manner, however, in which the directors of the company did not cease to deplore and complain of so evident a hardship, at length had the desired effect, and after existing ten or twelve years, so preposterous a system was successfully overthrown, and permission obtained from the king for the establishment of Spanish factories in the neighborhood of the China and India manufactures, as well as the power of addressing shipments direct to those foreign dominions.

The enlightened policy of their respective governments did not allow them to hesitate in giving a favorable reception to our factors and vessels, and the purchases and shipments of Asiatic goods being thus realized without the old obstructions, the Company was reasonably led to hope being able soon to increase its operations, and progressively present more satisfactory results to the shareholders, when those political convulsions succeeding soon after, which have unhinged or destroyed all the ordinary relations of trade, compelled them to abandon their hopes, till the wished-for calm should be again restored.

[389]Temporary expedient of 1803.In consequence of the new character and route given to the commercial enterprises of the Company, as authorized by a royal decree of July 12, 1803, the functions of the Manila factors were reduced to the annual shipment of a cargo of Asiatic goods to Peru, valued at $500,000, but only as long as the war lasted, and till the expiration of the extraordinary permits granted through the goodness of the king, and also to the transmitting to China and Bengal of the specie brought from America, and the collecting of certain quantities of indigo, sugar, or other produce of the Islands, with a view to gain by reselling it in the same market. Consequently, the moment things return to their pacific and ordinary course, will be the period when the necessity of the future existence of this establishment will cease, or at least, when the propriety will be evident of its reform or assimilation to the other commission houses, carrying on trade in Vera Cruz, Mexico, etc., which, not being hired establishments, do not create expenses when they cease to transact business.

Competition of foreign merchants.Against a measure of this kind it would be useless to allege, that, “by the exclusive privilege to introduce spirits and European effects into the colony, the Company has contracted the obligation of always keeping it properly supplied; that their very institution had for the basis the general improvement of the Islands, and in order duly to comply with these duties, it becomes indispensably necessary to keep up the present expensive establishment;” for, in the first place, in order, to render it incumbent on the company to introduce an indefinite quantity of European articles, it previously would be necessary to provide a vent for them, and this can never be the case, unless the exclusion of all competitors in the market is rigorously carried into effect.

As things now are, the North Americans, English, French, and every other nation that wishes, openly usurped this privilege, by constantly inundating the Islands with spirits and all kinds of effects, and it is very evident that this same abuse which authorizes the infraction of the above privilege, if in that light it could in any way be considered, totally exonerates the company from all obligations by them contracted under a different understanding. Besides, the circumstances which have taken place since the publication of the royal decree, creating the above establishment into a corporate body, in the year 1785, have entirely changed the order established in this respect. In the first place, the port of Manila has been opened to foreign nations, in consequence of the disinterested representations of the company itself, and for the direct advantage of general trade; nor was it necessary [390]to prevent our new guests from abusing the facilities thus granted to them, and much less to confine them to the mere introduction of Asiatic goods, the original plea made use of.

In the second, as soon as the inhabitants of the Philippine Islands became familiar with the more useful and elegant objects of convenience and luxury, which they were enabled to purchase from foreigners, at reasonable prices, it was natural for them to pay little regard to the superfluous aid of the company, more particularly when the latter were no longer able to sustain the competition, either in the sale or supply of a multitude of articles, which, thanks to our own national simplicity, are scarcely known in Spain, whence their outward-bound cargoes are divided. Hence it follows that, far from the importation and supplies of the company being missed, it may with great reason be presumed, that this formal renunciation of this ideal privilege of theirs, must rather have contributed to secure, in a permanent manner, adequate supplies for all the wants and whims of the inhabitants of the colony; and that the publicity of such a determination would act as a fresh allurement successively to bring to the port of Manila a host of foreign speculators, anxious to avail themselves of a fresh opening for commercial pursuits.

Company not a philanthropy.

The other objection, founded on the mistaken notion of its being inherent in, and belonging to, the very essence of the company, to promote the general improvement of the Philippine Islands, if well considered, will appear equally unjust. It is, in fact, a ridiculous, although too generally received, a prejudice to suppose, that the founders of this establishment proposed to themselves the plan of sinking the money of the shareholders in clearing the lands, and perfecting the rude manufactures of these distant Islands. To imagine this to have been one of the principal objects of the institution, or to suppose that, on this hard condition, their various privileges and exemptions were granted to them, is so far from the reality of the fact, that it would only be necessary to read with attention the 26th article of the quoted royal decree of creation, in order more correctly to comprehend the origin and constitutive system of this political body.

“The latter,” says the Duke de Almodovar, “is reduced to two principal points: the first of which is the carrying of the trade of Asia with that of America and Europe; and the second, the encouragement and improvement of the productions and manufacturing industry of the Islands. The one is the essential attribute of the company, constituting its real character of a mercantile society; and, in the other respect, it becomes an auxiliary of the government, [391]to whom the duties alluded to more immediately belong.” If to the above we add the preamble of the 43rd article of the new decree of 1803, the recommendation, made to the company, to contribute to the prosperity of the agriculture and manufacturing industry of the Islands, will appear as a limited and secondary consideration; for even if the question were carried to extremes, it could never extend to any more than the application of four per cent of the annual profits of the company indistinctly to both branches. If, however, any doubts still remained, the explanation or solution recently given to this question would certainly remove them; because, by the simple fact of its being expressed in the latter part of the aforesaid 43rd article, Profit percent to go to Spain.“That the above-mentioned four per cent was to be laid out, with the king’s approbation, in behalf of the agriculture and manufacturing industry of Spain and the Philippine Islands,” it is clear that the king reserves and appropriates to himself the investment of the amount to be deducted from the general dividends, in order to apply it where and how may be deemed most advisable. Consequently, far from considering the company in that respect under an obligation to contribute to the improvement of the Philippines exclusively, the only thing that can be required of them, when their charter is withdrawn, is, the repayment to the royal treasury of the four per cent on their profits, for a purpose so vaguely defined. In following up this same train of argument, it would seem that, in order to render the amount to be deducted from the eventual profits of the company, in the course of time, a productive capital in the hands of the sovereign, the funds of the society not only ought not to be diverted to the continuation of projects which consume them, but, on the contrary, it is necessary to place at their disposal the direct means by which these funds can be increased, in order to make up to the company in some measure the enormous losses experienced of late years, and at once free their commerce from the shackles with which it has hitherto been obstructed.

Need of special privilegesFinally, after twenty-four years of impotent and gratuitous efforts in the Philippines, and of the most obstinate opposition on the part of their rivals, it is now time for the company, by giving up the ungrateful struggle, to reform in every respect their expensive establishment in Manila, and to direct their principal endeavors to carry into effect the project so imperfectly traced out in the new decree of 1803. The opinion of the most vehement enemies of the privileged bodies tacitly approves this exception in their favor. Adam Smith, avowedly hostile to all monopolies, feels himself compelled [392]to confess that, “without the incentives which exclusive companies offer to the individuals of a nation carrying on little trade, possibly their confined capitals would cease to be destined to the remote and uncertain enterprises which constitute a commerce with the East Indies.”

Spanish commerce in its infancy.Our commerce, compared with that of other nations, notwithstanding what may be said on this subject, is most assuredly yet in a state of infancy. That with Asia, more especially, with the exception of the Royal Company, is almost unknown to all other classes. If it is, therefore, wished to exclude our many rivals from so lucrative a branch of trade as that which constitutes supplies for the consumption of the Peninsula and its dependencies, the means are obvious. The most material fact is in fact already done. The navigation to the various ports of Asia is familiar to the company’s navy; their factors and clerks have acquired a practical knowledge of that species of trade, essential to the undertaking, as well as such information as was at first unknown; but, after the great misfortune this body has experienced, it will be indispensably necessary to aid and invigorate them with large supplies of money, following the example of other governments in similar cases; in order that the successful issue of their future operations may compensate their past losses, and worthily correspond with the magnitude of the object.

Philippines a burden to Spain.This Asiatic colony, although considered as conferring great lustre on the crown and name of our monarch, by exhibiting the vast extent of the limits of his dominions, has in reality been, during a long series of years, a true burden to the government, or at least, a possession whose chief advantages have redounded in favor of other powers, rivals of our maritime importance. Notwithstanding all that has been said on the score of real utility, certain it is, that the Philippine establishment has cost the treasury large sums of money; although, within the last twenty-five or thirty years, it must be confessed that the public revenues has experienced a considerable increase, and, of itself, has become an object of some consequence to the state.

Profit from tobacco monopoly and foreign trade.Among the various causes which have contributed to produce so favorable an alteration, the chief one have been the establishment of the tobacco monopoly, on behalf of the crown, and the opening of the port of Manila to the flag of other nations, at peace with Spain. The first has considerably increased the entries into the public treasury, and the second has tended to multiply the general mass of mercantile operations, independent of the other beneficial [393]effects this last measure must have produced in a country, whose resources, trade and consumption had, from the time of the conquest, experienced the fatal shackles imposed by jealousy and ignorance.

Improvement in public finances.The improved aspect the colony soon assumed, by the introduction of this new system, as was natural, awakened the attention of ministers, and induced them more easily to consent to the measures subsequently proposed to them, principally intended to place those distant dominions on a footing of permanent security, so as to enable them to repel any fresh attempts on the part of an enemy. As, however, the productions of the country increased, the public expenses also became greater, although always in a much smaller proportion, with the exception of the interval between the years 1797 and 1802, when the government, fearful of a second invasion, was compelled, at its own expense, to provide against the danger with which these Islands were then threatened. If, therefore, as appears from the official reports of the treasurer-general, Larzabal, in my possession, the receipts at the treasury, in 1780, amounted only to $700,000 including the situado, or annual allowance for the expenses of government sent from New Spain, and after the ordinary charges of administration had been paid, a surplus of $170,000 remained in the hands of the treasurer; at present we have the satisfaction to find that the revenue is equal to $2,625,176.50 and the expenses do not exceed $2,179,731.87 by which means an annual surplus of $445,444.62 is left, applicable to the payment of the debt contracted during the extraordinary period above mentioned, now reduced to about $900,000 and afterwards transferable to the general funds belonging to the crown.

Economy over Spanish-American colonial administration.With regard to the administrative system, it is in every respect similar to the one observed in our governments of America, with this difference only, that, in the Philippine Islands, greater economy prevails in salaries, as well as in the number of persons employed. In former times, the establishment of intendencies, or boards of administration, was deemed expedient in Manila, Ilocos, Camarines, Iloilo, and Cebu; but they were soon afterwards reformed, or rather laid aside, on account of their being deemed superfluous. I would venture to state the grounds on which this opinion was then formed; but, as the sphere in which the king’s revenue acts in these Islands increases and extends, which naturally will be the case if the plans and improvements dictated by the present favorable circumstances are carried into effect, I do not hesitate to say that it will be necessary again to appeal to the establishment of a greater number of boards for the management and collection of the various branches [394]of the revenue, whether they are called intendencies, or by any other name; as it will be extremely difficult for the administration to do its duty, on the confined and inadequate plan under which it is at present organized.

Fiscal system.Under its existing form, it is constituted in the following manner: The governor of the Islands, in his quality of superintendent or administrator general, and as uniting in himself the powers of intendent of the army, presides at the board of administration of the king’s revenue, which is placed in the immediate charge of a treasurer and two clerks. The principal branches have their respective general directors, on whom the provincial administrators depend, and the civil magistrates, in the quality of sub-delegates, collect within their respective districts, the tributes paid by the natives in money and produce, and manage everything else relating to the king’s revenue. In ordinary cases, the general laws of the Indies govern, and especially are the ordinances or regulations of the Intendents of New Spain (Mexico) ordered to be observed in the Philippines. It ought further to be observed, that, in these Islands, the same as in all the vice-royalties and governments of America, there is a distinct body of royal decrees in force, which, in themselves, constitute a code of considerable size.