The Tobacco Monopoly

In terms of government revenue, tobacco is the most important product of the Philippines.

The Government has strictly monopolized its:

• cultivation
• manipulation
• sale

The Government derive a very large portion of their revenue from tobacco. Below are the estimates of its receipts:

Years | Gross Revenue | Expenses | Profit — | — | — 1866-7 | $8,418,939 | $4,519,866 | $3,899,073 1867 | | 7,033,576 | $2,627,976

As to the objections raised against this revenue on the score of its being opposed to justice and morality, many other sources of revenue in the colonial budget might be condemned (such as the poll-tax, gaming and opium licences, the brandy trade, and the sale of indulgences); yet none is so in vidious and pernicious as the tobacco monopoly.

Often in the course of this narrative of my travels I have had occasion to commend the clemency of the Spanish Government. In glaring contrast therewith, however, stands the management of the tobacco regulations.

According to the official tables of the chief of the Administration in Manila, 1871, the total annual revenue derived from the tobacco management between the years 1865 and 1869 amounted, on an average, to 5,367,262 dollars. By reason of proper accounts being wanting an accurate estimate of the expenditure cannot be delivered ; but it would be at least 4,000,000 dollars, so that a profit of only 1,367,262 dollars remains.

TOBACCO REGULATIONS

They appropriated the fields of the peasantry without the slightest indemnification—fields which had been brought under cultivation for their necessary means of sustenance; forced them, under penalty of bodily punishment, to raise, on the confiscated property, an article which required an immense amount of trouble and attention, and which yielded a very uncertain crop; and they then valued the harvested leaves arbitrarily and without any appeal, and, in the most favourable case, paid for them at a nominal price fixed by themselves.

To be paid at all, indeed, appears to have been a favour, for it has not been done in full now for several years in succession. Spain regularly remains indebted to the poor unlucky peasants in the amount of the miserable pittance allowed, from one year’s end to another. The Government ordered the officials to exact a higher return from the impoverished population of the tobacco districts; and they even rewarded informers who, after pointing out to them fields already owned, but which were considered suitable to the cultivation of tobacco, were installed into possession of the proclaimed lands in the place of the original owners. For proofs of these accusations, one need only peruse a few paragraphs contained in the following stringent regulations, entitled “General Instructions,”* and, further, a few extracts from the official dispatches of Intendant-General Agius to the Colonial Minister :-*

Cap. 25, § 329. The compulsory system of cultivation in Cagayan, New Vizcaya, Gapan, Ygorrotes, and Abra to remain in force.

§ 331. The Director-General of the Government is authorised to extend compulsory labour to the other provinces, or to abolish it where already introduced. These instructions may be altered wholly or in part as occasion requires.

• Instruccion general para la Direccion, Administracion, y Intervencion de las Rentas Estancadas, 1849.

• “Memoria sobre el Desestanco del Tabaco en las Islas Filipinas." Don J. S. Agius, Binondo (Manila), 1871.

$ 332. Prices may be either increased or lowered.

$ 337. Claims or actions concerning the possession of tobacco lands pending before the usual tribunal shall not prevent such lands from being used for the purposes of tobacco cultivation, the present proprietor being under strict obligation to continue the cultivation either in person or by substitute. (If he omits to do so, the magistrate or judge takes upon himself to appoint such substitute.)

$ 351. The collectors have received “ denuncias," i.e. information, that land adapted to tobacco growing is lying fallow, and that it is private property. In case such land is really suitable to the purposes of tobacco cultivation, the owners thereof are hereby summoned to cultivate the same with tobacco in preference to anything else. At the expiration of a certain space of time the land in question is to be handed over to the informer. Be it known, however, that, notwithstanding these enactments, the possessory title is not lost to the owner, but he is compelled to relinquish all rights and usufruct for three years.

Cap. 27, $ 357. An important duty of the collector is to insure the greatest possible extension of the tobacco cultivation upon all suitable lands, but in particular upon those which are specially convenient and fertile. Lands which, although suitable for tobacco growing, were previously planted with rice or corn, shall, as far as practicable, be replaced by forest clearings, in order, as far as possible, to prevent famine and to bring the interests of the natives into harmony with those of the authorities.

§ 361. In order that the work which the tobacco cultivation requires may not be neglected by the natives, and that they may perform the field work necessary for their sustenance, it is ordered that every two persons working together shall, between them, cultivate 8,000 square varas, that is, 2 acres of tobacco land.

$ 362. Should this arrangement fail to be carried out either through age, sickness, or death, it shall be left to the priest of the TOBACCO REGULATIONS.

district to determine what quantity of work can be accomplished by the little children, having regard to their strength and number.

§ 369. Every collector who consigns from his district 1,000 fardos more than in former years, shall receive for the overplus a double gratuity, but this only where the proportion of firstclass leaves has not decreased.

$ 370. The same gratuity will be bestowed when there is no diminution in bulk, and one-third of the leaves is of first-class quality.

The following sections regulate the action of the local authorities :

$ 379. Every governor must present annually a list, revised by the priest of the district, of all the inhabitants in his district of both sexes, and of those of their children who are old enough to help in the fields.

$ 430. The officers shall forward the emigrants on to Cagayan and New Biscay, and will be entrusted with 5 dollars for that purpose, which must be repaid by each individual, as they cannot be allowed to remain indebted in their province.

$ 436. Further it is ordered by the “Buen Gobierno” (good governor) that no Indian shall be liable for a sum exceeding 5 dollars, incurred either as a loan or a simple debt. Thus the claim of a higher sum can not impede the emigration.

$ 437. The Hacienda (Exchequer) shall pay the passage money and the cost of maintenance from Ilocos.

$ 433. They are to be provided with the means of procuring cattle, tools, &c., until the first harvest (although the Indian is only liable for 5 dollars).

$ 439. Such advances are, it is true, personal and individual; but, in the case of death or flight of the debtor, the whole village is to be liable for the amount due.

Tobacco (Nicotiana tabacum, L.) was introduced into the Philip

pines soon after the arrival of the Spaniards by the missionaries, who brought the seed with them from Mexico.* The soil and climate being favourable to its production, and the pleasure derived from it being speedily discovered by the natives, naturally assisted in its rapid adoption. Next to the Cuban tobacco and a few sorts of Turkisht it is admitted to be the best; and in the colony it is asserted by competent judges that it would soon surpass all others, if the existing regulations were abolished and free trade established.

There can be no doubt in the minds of impartial observers that the quality aud quantity of the produce might be considerably increased by such a change; on the other hand, many of the prejudiced officials certainly maintain the direct contrary. The real question is, to what extent these expectations may be realised in the fulfilinent of such a measure; of course, bearing in mind that the judgment is swayed by a strong desire for the abolition of a system which interferes at present with their prospects of gain. But the fact is that, even now, the native

. The tobacco in China appears to have come from the Philippines. “The memo. randa discovered in Wang-tao leave no possible doubt that it was first introduced into South China from the Philippine Islands in the sixteenth and seventeenth century, most probably by way of Japan.”—(Notes and Queries, China and Japan, May 31st, 1867.)

From Schlegel, in Batavia, it was brought by the Portuguese into Japan gomewhere between the years 1573 and 1591, and spread itself so rapidly in China that we find even as early as 1638, that the sale of it was forbidden under penalty of beheading.

According to Notes and Queries, China and Japan, 31st July, 1867, the use of tobacco was quite common in the “ Mantchu" army. In a Chinese work, Natural History Miscellany, it is written : “ Yen t’sao (literally smoke plant) was introduced into Fukien about the end of the Wan-li Government, between 1573 and 1620, and was known as Tan-pa-ku (from Tombaku).”

• West Cuba produces the best tobacco, the famous Vuelta abajo, 400,000 cwt. at from 20 to 140 tbalers the cwt.; picked sorts being valued at from 800 to 1,000 thalers per cwt. Cuba produces 640,000 cwt. The cigars exhibited in the Paris Exhibition of 1867 were worth from 35 to 570 thalers per thousand. The number of cigars annually exported is estimated at about 5,000,000. (Jury Report, v., 375.) In Jenidje-Karasu (Salonica) 17,500 cwt. are obtained annually, of which 2,500 cwt. are of the first quality; the cost is 78. the oka (about 3s. per lb.). Picked sorts are worth 15s. per lb., and even more.–Saladin Bey, La Turquie à l’Exposition, p. 91.

MANILLA TOBACCO

grown tobacco, notwithstanding all the defects inseparable from an illicit trade, is equal to that produced by the Government officials in their own factories, and is valued at the same rate with many of the Habana brands; and the Government cigars of the Philippines are preferred to all others throughout Eastern Asia. Indeed, rich merchants, to whom a difference of price is no object, as a rule take the Manila cigars before Habanas.

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 Habana tobacco loses its flavour 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 labour, and the chronic insolvency of the Colonial Exchequer, 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.

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 monopolised 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.*

The decision of the Captain-General of Gandará upon this

• “In Cuba the tobacco industry is entirely free. The extraordinary increase of the trade and the improved quality of the tobacco are, in great measure, to be ascribed to the honest competition existing between the factories, who receive no other protection from the Government than a recognition of their operations." (Jury Report, 1867, 6., 375.)

question is in the highest degree worthy of notice. In a MS. Report to the Colonial Minister, March, 1868, 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 : 1st, Cagayan and Ysabel ; 2nd, Ygorrotes ; 3rd, Island of Mindanao ; 4th, Bisayas; 5th, New Ecija.

From the Government Order, dated 20th November, 1625, it is evident that even at that early period the sale of betel nut, palm spirit (toddy), tobacco, &c., 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 Burgas. And a Government Order, under" date 9th January, 1780 (confirmed by Departmental Regulations, 13th December, 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 otro mondo).

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

GOVERNMENT MONOPOLY

for this system were less favourable. 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.* 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 authorised and in the service of the Government. 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 allowed to be sold to the Government only.

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, inasinuch as the magistrates, who drew a salary of 600 dollars, and paid a license of from 100 to 300 dollars for the right of trading,

• Basco also introduced the cultivation of silk, and had 4,500,000 mulberry trees planted in the Camarines. This industry, immediately upon his retirement, was allowed to fall into decay.

† According to Lapérouse, this measure occasioned a revolt in all parts of the island, which had to be suppressed by force of arms. In the same manner the monopoly introduced into America at the same time brought about a dangerous insurrection, and was the means of reducing Venezuela to a state of extreme poverty, and, in fact, was the cause of the subsequent downfall of the colony.

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 monopolising magistrates. At present, the following general regulations are in force, subject, however, to continual variation in details.

By a Departmental Order, 5th September, 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, * 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.

In the Bisayas and in Mindanáo 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 neighbouring 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.

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

• A fardo (pack) contains 40 manos (bundles) ; 1 mano = 10 manojitos, i ’ manojíto = 10 leaves. Regulations, $ 7.

PRICES OF TOBACCO

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.*

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

• The following regulations are in force throughout Luzon :-/st. Four classes of tobacco will be purchased. 2nd. These classes are thus specified : the first to consist of leaves at least 18 inches long (om 418); the second of leaves between 14 and 18 inches (0m 325); the third of leaves between 10 and 14 inches (om 23-2); and the fourth of leaves at least 7 inches in length (Om 163). Smaller leaves will not be accepted. This last limitation, however, has recently been abandoned, so that the quality of the tobacco is continually depreciating in the hands of the Government, who have added two other classes.

A fardo, 1st class, weighs 60 lbs., and in 1867 the Government rate of pay was as follows: 1 Fardo, 1st class, 60 lbs. . . . . . . . 9.50 dollars.

. 1:00 , -English Consular Report.

The following table gives the different brands of cigars manufactured by the Government, and the prices at which they could be bought in 1867 in Estanco (ie. a place privileged for the sale) :

have been so arranged as to exact a still larger gain from this very impolitic source of revenue.

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 story 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 1867) to 600,000, 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 favourable a market that it was at once decreed that no tobacco in Manila should thenceforth be sold at less than 25 dollars per cwt.* 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 Gándara 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 1867, 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.

The fourth, fifth, and sixth classes, the greater part of which would before have been burnt, but which now form no inconsiderable portion of the total crop, are in the open markets positively unsaleable, and can be utilised only in the form of a bonus to Spain, which annually receives, under the title of TOBACCO TRIBUTE.

• On an average 407,500,000 of cigars and 1,041,000 of raw tobacco are exported annually, the weight of which together is about 56,000 cwt. after deducting what is given away in the form of gratuities.

colony were not compelled to pay half the freight of these gifts, Spain would certainly ask to be relieved of these “ marks of attention.” Seeing that, according to the decision of the chief of the Government, the greater portion of this tobacco is of such inferior quality that it can find no purchaser at any price, it is impossible that its value should cover either the cost of carriage or the customs duty. Moreover, this tobacco tribute is a great burden on the colonial budget; which, in spite of all deficits, is charged with the expenses attending the collection of the tobacco, its packing, its cost of local transport, and half the expense of its carriage to Europe.

March, 1871, was to witness the advent of the Happy Age in the realisation of La Gándara’s proposals. The IntendantGeneral of the Exchequer laid an excellent statement before the Colonial Minister, pointing out plainly to the chief of the Government the disadvantages arising from this mode of administration, and urging the immediate repeal of the monopoly. In the next place proof was adduced, supported by official vouchers, that the profits derived from the tobacco monopoly were much smaller than usual. The total average receipts of the tobacco administration for the five years 1865 to 1869, according to official accounts, amounted to 5,367,262 dollars; for the years 1866 to 1870, only 5,240,935 dollars. The expenses cannot be accurately estimated, inasmuch as there are no strict accounts obtainable ; if, however, the respective expenses charged in the colonial budget are added together, they amount to 3,717,322 dollars, of which 1,812,250 dollars is for purchase of raw tobacco.

Besides these expenses pertaining exclusively to the tobacco administration there are still many other different items to be taken into account; yet the cost incurred in this branch of the service would be saved, if not altogether, at least largely, if the State surrendered the tobacco monopoly. The total of the disbursements must certainly, at the very lowest, be estimated at 4,000,000 dollars; so, therefore, the State receives only a net profit of 1,367,000 dollars; but even this is not to be reckoned on in the future, for if the Government does not speedily cease carrying on this trade, they will be forced into a very considerable and unavoidable expense. To begin with, they must erect new factories and warehouses ; better machinery must be bought; wages will have to be considerably increased; and, above all, means must be devised to pay off the enormous sum of 1,600,000 dollars, in which the Government is indebted to the peasants for the crops of 1869 and 1870, and to assure cash payments for future harvests. This is the only possibile mode of preventing the decay of the tobacco cultivation in the different provinces, as well as relieving the misery of the wretched inhabitants.

At the same time Agius pointed out how trifling in reality the arrears were on account of which the Government was abandoning the future of the colony, and showed the misfortunes resulting from the monopoly. He represented that the people of the tobacco district, who were the richest and most contented of all in the Archipelago, found themselves plunged into the deepest distress after the increase of the Government dues. They were, in fact, far more cruelly treated than the slaves in Cuba, who, from self-interested motives, are well-nourished and taken care of; whereas in this case, the produce of compulsory labour has to be delivered to the State at an arbitrarily determined price; and even this price is paid only when the condition of the treasury, which is invariably in difficulties, permits. Frequently their very means of subsistence failed them, in consequence of their being forbidden to carry on the cultivation; and the unfortunate people, having no other resources for the relief of their pressing necessities, were compelled to alienate the debtor’s bond, which purchased the fruits of their enforced toil but had been left unpaid. Thus, for an inconsiderable deficit of about 1,330,000

MISERY OF THE PEOPLE.

dollars, the whole population of one of the richest provinces is thrown into abject misery ; a deep-rooted hatred naturally arises between the people and their rulers; and incessant war ensues between the authorities and their subjects. Besides which, an extremely dangerous class of smugglers have recently arisen, who even now do not confine themselves to mere smuggling, but who, on the very first opportunity presented by the prevailing discontent, will band themselves together in one solid body. The official administrators, too, are charged with gross bribery and corruption ; which, whether true or not, occasions great scandal, and engenders increasing disrespect and distrust of the colonial administration as well as of the Spanish people generally. *

The preceding record of facts has been not only written, but also printed ; and it seems to indicate that gradually in Spain, and also in wider circles, people are becoming convinced of the untenableness of the tobacco monopoly; yet, in spite of this powerful review, it is considered doubtful by competent judges whether it will be given up so long as there are any apparent or appreciable returns derived therefrom. These acknowledged evils have long been known to the Colonial Government; but, from the frequent changes of ministers, and the increasing want of money, the Government is compelled, so long as they are in office, to use all possible means of obtaining profits, and to abstain from carrying out these urgent reforms lest their own immediate downfall should be involved therein. Let us, however, cherish the hope that increased demand will cause a rise in the prices; a few particularly good crops, and other propitious circumstances, would relieve at once the Colonial Exchequer from its difficulties ; and then the tobacco monopoly might be cheerfully

• The poor peasant being brought into this situation finds it very hard to maintain his family. He is compelled to borrow money at an exorbitant rate of interest, and, consequently, sinks deeper and deeper into debt and misery. The dread of fines or bodily punishment, rather than the prospect of high prices, is the chief method by which the supplies can be kept up.-(Report of the English Consul.)

surrendered. One circumstance favourable to the economical management of the State that would be produced by the surrender of the tobacco monopoly would be the abolition of the numerous army of officials which its administration requires. This might, however, operate reversely in Spain. The number of place-hunters that would be created thereby must be very welcome to the ministers in power, who would thus have the opportunity of providing their creatures with profitable places, or of shipping off inconvenient persons to the Antipodes from the mother-country, free of cost. The colony, be it known, has not only to pay the salaries, but also to bear the costs of their outward and homeward voyages. Any way, the custom is so liberally patronised that occasionally new places have to be created in order to make room for the newly arrived nominees. *