The following are some of the most interesting items of the Budget:

CURIOUS ITEMS OF REVENUE

P cts.

2,760,613 Identification Documents (Cedulas personales), costing 4 per cent, to collect—gross value 4,401,629 25 Tax on the above, based on the estimated local consumption of Tobacco 222,500 00 Chinese Capitation Tax 236,250 00 Tax on the above for the estimated local consumption of Tobacco 11,250 00 Recognition of vassalage collected from the unsubdued mountain tribes 12,000 00 Industrial and Trading Licences (costing 1/2 per cent, to collect), gross value 1,350,000 00 Yield of the Opium Contract (farmed out) 483,400 00 Yield of the Cock-fighting Contract (farmed out) 149,039 00 Lotteries and Raffles, nett profit say 501,862 00 State Lands worked by miners 100 00 Sale of State Lands 50,000 00 Mint—Profits on the manipulation of the bullion, less expenses of the Mint (P 46,150), nett 330,350 00 Stamps and Stamped Paper 548,400 00 Convict labour hired out 50,000 00

CURIOUS ITEMS OF EXPENDITURE



P cts. 34 per cent, of the maintenance of Fernando Po (by Decree of August 5, 1884) 68,618 18 Share of the pension paid to the heir of Christopher Columbus, the Duke de Veragua (P 23,400 a year) 3,000 00 Share of the pension paid to Ferdinand Columbus, Marquis de Barboles 1,000 00 The Marquis de Bedmar is the heir of the assayer and caster in the Mint of Potosi (Peru). The concern was taken over by the Spanish Government, in return for an annual perpetual pension, of which this Colony contributed the sum of 1,500 00 The Consular and Diplomatic Services, Philippine Share 66,000 00 Postal and Telegraph Services (staff of 550 persons) 406,547 17 The Submarine Cable Co. Subsidy (Bolinao to Hong-Kong) 48,000 00 Charitable Institutions partly supported by Government, including the "Lepers' Hospital" P500 26,887 50

THE ARMY AND ARMED LAND FORCES

Rank and File and Non-commissioned Officers as follows:—

Infantry, Artillery, Engineer, and Carabineer Corps 9,470 Cavalry Corps 407 Disciplinary Corps (Convicts) 630 Disciplinary Corps (Non-commissioned Officers) 92 Three Civil Guard Corps (Provincial Constabulary) 3,342 Veteran Civil Guard Corps (Manila Military Police) 400

Total number of men 14,341



ARMY OFFICERS IN THE PHILIPPINES.

Year 1888.

How Employed. Lieutenant-Generals. Brigadier-Generals. Colonels. Lieutenant-Colonels. Majors. Captains. Lieutenants. Sub-Lieutenants. Totals.

Governor-General, with local rank of Captain-General 1 1 Employed in Government Administration, Political Military Provincial Governments, Staff Officers and Officers at the Orders of the Governor-General 1 7 7 14 39 37 23 12 140 With command or attached to Army Corps and Disciplinary Corps 5 11 14 88 136 127 381 Civil Guard 3 3 9 33 54 54 156 Veteran Civil Guard 1 6 6 13 Invalid Corps 1 1 Military Academy 1 1 2 4 Prisons and Penitentiaries 1 1 4 3 9 Commissariat Department 1 1 1 14 18 35 Judicial Audit Department 1 1 2 2 6 In expectation of service 1 3 6 12 12 12 46 In excess of Active Service requirements 3 1 7 9 20 Total of Officers 2 9 19 36 73 191 262 220 812

The Archbishop, as Vicar-General of the Armed Forces, ranked in precedence as a Field-Marshal. (In the Spanish Army a Field-Marshal ranks between a Brig.-General and Lieut.-General.)



OFFICERS' PAY PER ANNUM

Rank. Ordinary Pay. When Commanding a Corps. Extra. When in Civil Guard. When in Veteran Civil Guard. P P P P Captain-General was paid as Governor-General of the Colony 40,000 [108] Lieutenant-General (local rank), Sub- Inspector of Army Corps 12,000 Brigadier-General 4,500 800 Colonel 3,450 600 4,200 Lieutenant-Colonel 2,700 400 3,288 Major 2,400 2,520 2,880 Captain 1,500 1,584 Lieutenant 1,125 1,242 1,485 Sub-Lieutenant 975 1,068 1,275

After 6 years' and up to 9 years' service, an officer could claim a free passage back to the Peninsula for himself and, if married, his family.

After 9 years' service, his retirement from the Colony for three years was compulsory. If he nevertheless wished to remain in the Colony, he must quit military service. If he left before completing six years' service, he would have to pay his own passage unless he went "on commission" or with sick-leave allowance.

Estimated Annual Disbursements for—

P cts

The Civil Guard (Constabulary), composed of Three Corps = 3,342 Men and 156 Officers 638,896 77 The Veteran Civil Guard (Manila Police) One Corps = 400 Men and 13 Officers 73,246 88 ————— The Disciplinary Corps, Maintenance of 630 Convicts and Material 56,230 63 (For the Disciplinary Convict Corps) 92 Non-commissioned Officers and 23 Officers 47,909 51 ========== P 104,140 14

Army Estimates

P cts

Estimate according to the Budget for 1888 Plus the following sums charged on other estimates, viz.:— 3,016,185 91 Disciplinary Corps, maintenance of 630 Convicts and material 56,230 63 The Civil Guard 638,896 77 The Veteran Civil Guard 73,246 88 Pensions 117,200 00 Transport and maintenance of Recruits from Provinces 6,000 00 Expeditions to be made against the Moros—Religious ceremonies to celebrate Victories gained over them—Maintenance of War Prisoners, etc. 11,000 00 ============ Total cost of Army and Armed Land Forces P 3,918,760 19

Before the walls were built around Manila, about the year 1590, each soldier and officer lived where he pleased, and, when required, the troops were assembled by the bugle call.

At the close of the 16th century barracks were constructed, but up to the middle of last century the native troops were so badly and irregularly paid that they went from house to house begging alms of the citizens (vide p. 53, King Philip II.'s Decree).

In the 17th century troops died of sheer want in the Fort of Yligan (Mindanao Is.), and when this was represented to the Gov.-General he generously ordered that the Spanish soldiers were in future to be paid P2 per month and native soldiers P1 per month to hold the fort, at the risk of their lives, against attack from the Mahometans.

In the forts of Labo and Taytay (Palauan Is.) the soldiers' pay was only nominal, rations were often short, and their lives altogether most wretched. Sometimes they were totally overlooked by the military chiefs, and they had to seek subsistence as best they could when provisions were not sent from the capital (videp. 157).

Mexican soldiers arrived in nearly every ship, but there were no barracks for them, no regular mode of living, no regulations for their board and lodging, etc.; hence many had to subsist by serving natives and half-breeds, much to the discredit of the mother country, and consequent loss of prestige. Each time a new expedition was organized a fresh recruiting had to be made at great cost and with great delay. There was practically no regular army except those necessarily compelled to mount guard, etc., in the city. Even the officers received no regular pay until 1754, and there was some excuse for stealing when they had a chance, and for the total absence of enthusiasm in the Service. When troops were urgently called for, the Gov.-General had to bargain with the officers to fill the minor posts by promises of rewards, whilst the high commands were eagerly sought for, not for the pay or the glory, but for the plunder in perspective.

In 1739 the Armoury in Manila contained only 25 Arquebuses of native make, 120 Biscayan muskets, 40 Flint guns, 70 Hatchets, and 40 Cutlasses.

The first regular military organization in these Islands was in the time of Governor Pedro Manuel de Arandia (1754), when one regiment was formed of five companies of native soldiers, together with four companies of troops which arrived with the Governor from Mexico. This corps, afterwards known as the "King's Regiment" [109] (Regimiento del Rey) was divided into two battalions, increased to 10 companies each as the troops returned from the provinces.

The 20 companies were each composed as follows:—

1 captain, 1 lieutenant, 1 sub-lieutenant, 4 sergeants, 2 drummers, 6 first corporals, 6 seconds corporals, and 88 rank and file.

The Gov.-General's Body Guard of Halberdiers was reformed, and thenceforth consisted of 18 men, under a captain and a corporal.

The Monthly Pay under these reforms was as follows:—

Staff Officers. Regimental Officers Governor-General's P. and Staff P. c. Body Guard P.

Chief of the Staff 40 Captain 25 00 Captain 35 Adjutant-Major. 25 Lieutenant. 18 00 Corporal 10 Adjutant. 18 Sub-Lieutenant. 14 00 Guards 5 Captain 12 Sergeant 4 00 Drummer 3 00 First Corporal 3 25 Second Corporal 3 00 Rank and File 2 62 1/2

From October 1, 1754, the troops were quartered in barracks, Commissariat Officers were appointed, and every man and every officer was regularly paid fortnightly. The soldiers were not used to this discipline, and desertion was frequent. They much preferred the old style of roaming about to beg or steal and live where they chose until they were called out to service, and very vigorous measures had to be adopted to compel them to comply with the new regulations.

In May, 1755, four artillery brigades were formed, the commanding officer of each receiving P30 per month pay.

In 1757 there were 16 fortified provincial outposts, at a total estimated cost of P37,638 per annum (including Zamboanga, the chief centre of operations against the Mahometans, which alone cost P18,831 in 1757), besides the armed forces and Camp of Manila, Fort Santiago, and Cavite Arsenal and Fort, which together cost a further sum of P157,934 for maintenance in that year.

SPANISH VESSELS IN PHILIPPINE WATERS

Year 1898

Name. Class. Tons. H.P.

Reina Cristina Cruiser 3,500 3,950 Castilla Cruiser 3,260 4,400 Don Anto. de Ulloa Cruiser 1,200 1,523 Don Juan de Austria Cruiser 1,130 1,600 Isla de Cuba Cruiser 1,048 2,200 Isla de Luzon Cruiser 1,048 2,200 Velasco Gunboat 1,152 1,500 Elcano Gunboat 560 600 General Lezo Gunboat 520 600 Argos Gunboat 508 600 Marques del Duero Gunboat 500 550 Manila Transport 1,900 750 General Alava Transport 1,200 1,000 Cebu Transport 532 600 Callao Gunboat, and 4 others very small, besides 3 armed steam launches built in Hong-Kong, viz.:—Lanao, Corcuera, and General Blanco.



NAVAL DIVISIONS

Station. Commander's Pay. P

South Division 5,760 Palauan (Pta. Princesa) 4,560 Isabel de Basilan 3,360 Balabac Island 3,360 Corregidor Island 3,360 West Caroline Islands 3,360 East Caroline Islands 4,560



HARBOUR-MASTERS

Station. Pay. Station. Pay. P P Manila 3,200 Pangasinan 1,500 Yloilo 3,200 Ilocos Norte y Sur. 1,500 Cebu 1,500 Cagayan 1,500 Capis 1,500 Ladrone Islands 1,500 Zamboanga 1,500 Laguimanoc (Civilian) 144

The Chief of the Philippine Naval Forces was a Rear-Admiral receiving P16,392 per annum.

There were two Brigades of Marine Infantry, composed of 376 men with 18 officers.

Cavite Arsenal

The chief Naval Station was at Cavite, six miles from Manila. The forces at this station were 90 Marines as Guards, and 244 Marines as reserves. One hundred convicts were employed for Arsenal labour.

The Officer in command of the Cavite Arsenal and Naval Station took rank after the Rear-Admiral, and received a salary of P8,496 per annum.

The Navy Estimates (Budget for 1888) amounted to P2,573,776.27.



Spanish Judicial Statistics



Civil and Criminal Law Courts

The Civil and Criminal Law Courts were as follows, viz.:—

2 Supreme Courts in Manila and Cebu, quite independent of each other. 4 First-Class Courts of Justice in Manila (called "de termino.") 8 First-Class Courts of Justice in the Provinces (called "de termino_.") 10 Second-Class Courts of Justice in the Provinces (called "de ascenso.") 19 Third-Class Courts of Justice in the Provinces (called "de entrada.") 7 Provincial Governments with judicial powers.



Judges' Salaries

President of the Supreme Court of Manila P7,000 President of the Supreme Court of Cebu 6,000 Judge of each of the 12 First-Class Courts 4,000 Judge of each of the 10 Second-Class Courts 3,000 Judge of each of the 19 Third-Class Courts 2,000



Law Courts Estimate for 1888

P cts.

Supreme Court of Manila 90,382 00 Supreme Court of Cebu 49,828 00 All the minor Courts and allowances to Provincial Governors with judicial powers 192,656 00 ———- — Estimated total cost for the year P332,866 00



Penitentiaries and Convict Settlements

Manila (Bilibid Jail) containing on an average 900 Native Convicts And in 1888 there were also 3 Spanish Convicts Cavite Jail contained in 1888 51 Native Convicts Zamboanga Jail contained in 1888 98 Native Convicts Agricultural Colony of San Ramon (Zamboanga), worked by convict labour, contained in 1888 164 Native Convicts Ladrone Island Penal Settlement contained in 1888 101 Native Convicts Ladrone Island Penal Settlement contained in 1888 3 Spanish Convicts In the Army and Navy Services 730 Native Convicts ——- 2,045 Convicts

Total estimated disbursements for Penitentiaries and Convict maintenance in the Settlements for the year P82,672.71

Brigandage first came into prominence in Governor Arandia's time (1754-59), and he used the means of "setting a thief to catch a thief," which answered well for a short time, until the crime became more and more habitual as provincial property increased in value and capital was accumulated there. In 1888 the Budget provided an allowance of 2,000 pesos for rewards for the capture or slaughter of these ruffians. Up to the end of Spanish rule, brigandage, pillage, and murder were treated with such leniency by the judges that there was little hope for the extinction of such crimes. When a band of thieves and assassins attacked a village or a residence, murdered its inhabitants, and carried off booty, the Civil Guard at once scoured the country, and often the malefactors were arrested. The Civil Guard was an excellent institution, and performed its duty admirably well; but as soon as the villains were handed over to the legal functionaries, society lost hope. Instead of the convicted criminals being garrotted according to law, as the public had a right to demand, they were "protected"; some were let loose on the world again, whilst others were sent to prison and allowed to escape, or they were transported to a penal settlement to work without fetters, where they were just as comfortable as if they were working for a private employer. I record these facts from personal knowledge, for my wanderings in the Islands brought me into contact with all sorts and conditions of men. I have been personally acquainted with many brigands, and I gave regular employment to an ex-bandit for years.

The Philippine brigand—known in the northern islands as Tulisan and in the southern islands as Pulajan—is not merely an outlaw, such as may yet be found in Southern and Eastern Europe; his infamous work of freebooting is never done to his satisfaction without the complement of bloodshed, even though his victim yield to him all without demur. Booty or no booty, blood must flow, if he be the ordinary Tulisan of the type known to the Tagalogs as dugong-aso (blood of a dog). as distinguished from the milder Tulisan pulpul (literally, the blunt brigand), who robs, uses no unnecessary violence, but runs away if he can, and only fights when he must.

At Christmas, 1884, I went to Laguimanoc in the Province of Tayabas to spend a few days with an English friend of mine. [110] On the way there, at Sariaya, I stayed at the house of the Captain of the Civil Guard, when a message came to say that an attack had been made the night before on my friend's house, his manager, a Swede, having been killed, and many others in the village wounded. The Captain showed me the despatch, and invited me to join him as a volunteer to hunt down the murderers. I agreed, and within half an hour we were mounted and on their track all through that dark night, whilst the rain poured in torrents. Four native soldiers were following us on foot. We jumped over ditches, through rice-paddy fields and cocoanut plantations, and then forded a river, on the opposite bank of which was the next guards' post in charge of a lieutenant, who joined us with eight foot-soldiers. That same night we together captured five of the wretches, who had just beached a canoe containing part of their spoils. The prisoners were bound elbows together at their backs and sent forward under escort. We rode on all night until five o'clock the next morning, arriving at the convent of Pagbilao just as Father Jesus was going down to say Mass. I had almost lost my voice through being ten hours in the rain; but the priest was very attentive to us, and we went on in a prahu to the village where the crime had been committed. In another prahu the prisoners were sent in charge of the soldiers. In the meantime, the Chief Judge and the Government Doctor of the province had gone on before us. On the way we met a canoe going to Pagbilao, carrying the corpse of the murdered Swede for burial. When we arrived at Laguimanoc, we found one native dead and many natives and Chinese badly wounded.

My friend's house had the front door smashed in—an iron strong-box had been forced, and a few hundred pesos, with some rare coins, were stolen. The furniture in the dining-room was wantonly hacked about with bowie-knives, only to satisfy a savage love for mischief. His bedroom had been entered, and there the brigands began to make their harvest; the bundles of wearing-apparel, jewellery, and other valuables were already tied up, when lo! the Virgin herself appeared, casting a penetrating glance of disapproval upon the wicked revelry! Forsaking their plunder, the brigands fled in terror from the saintly apparition. And when my friend re-entered his home and crossed the bloodstained floor of the dining-room to go to his bedroom, the cardboard Virgin, with a trade advertisement on the back, was still peeping round the door-jamb to which she was nailed, with the words "Please to shut the door" printed on her spotless bust.

The next day the Captain remained in the village whilst I went on with the Lieutenant and a few guards in a prahu down the coast, where we made further captures, and returned in three days. During our journey in the prahu the wind was so strong that we resolved to beach our craft on the seashore instead of attempting to get over the shoal of the San Juan River. We ran her ashore under full sail, and just at that moment a native rushed towards us with an iron bar in his hand. In the evening gloom he must have mistaken us for a party of weather-beaten native or Chinese traders whose skulls he might smash in at a stroke and rifle their baggage. He halted, however, perfectly amazed when two guards with their bayonets fixed jumped forward in front of him. Then we got out, took him prisoner, and the next day he was let off with a souvenir of the lash, as there was nothing to prove that he was a brigand by profession. The second leader of the brigand gang was shot through the lungs a week afterwards, by the guards who were on his track, as he was jumping from the window-opening of a hut, and there he died.

The Captain of the Civil Guard received an anonymous letter stating where the brigand chief was hiding. This fact came to the knowledge of the native cuadrillero officer who had hitherto supplied his friend, the brigand, with rice daily, so he hastened on before the Captain could arrive, and imposed silence for ever on the fugitive bandit by stabbing him in the back. Thus the cuadrillero avoided the disclosure of unpleasant facts which would have implicated himself. The prisoners were conducted to the provincial jail, and three years afterwards, when I made inquiries about them, I learnt that two of them had died of their wounds, whilst not a single one had been sentenced.

The most ignorant classes believe that certain persons are possessed of a mystic power called anting-anting, which preserves them from all harm, and that the body of a man so affected is even refractory to bullet or steel. Brigands are often captured wearing medallions of the Virgin Mary or the Saints as a device of the anting-anting. In Maragondon (Cavite), the son of a friend of mine was enabled to go into any remote place with impunity, because he was reputed to be possessed of this charm. Some highwaymen, too, have a curious notion that they can escape punishment for a crime committed in Easter Week, because the thief on the cross was pardoned his sins.

In 1885 I purchased a small estate, where there was some good wild-boar hunting and snipe-shooting, and I had occasion to see the man who was tenant previous to my purchase, in Manila Jail. He was accused of having been concerned in an attack upon the town of Mariquina, and was incarcerated for eighteen months without being definitely convicted or acquitted. Three months after his release from prison he was appointed petty-governor of his own town, much to the disgust of the people, who in vain petitioned against it in writing.

I visited the Penal Settlement, known as the Agricultural Colony of San Ramon, situated about fifteen miles north of Zamboanga, where I remained twelve days. The director of the settlement was D. Felipe Dujiols, an army captain who had defended Onate (in Guipuzcoa, Spain), during the Carlist war; so, as we were each able to relate our personal experiences of that stirring period, we speedily became friends. As his guest, I was able to acquire more ample information about the system of convict treatment. With the 25 convicts just arrived, there were in all 150 natives of the most desperate class—assassins, thieves, conspirators, etc., working on this penal settlement. They were well fed, fairly well lodged, and worked with almost the same freedom as independent labourers. Within a few yards of the director's bungalow were the barracks, for the accommodation of a detachment of 40 soldiers—under the command of a lieutenant—who patrolled the settlement during the day and mounted guard at night. During my stay one prisoner was chained and flogged, but that was for a serious crime committed the day before. The severest hardship which these convicts had to endure under the rule of my generous host, D. Felipe, was the obligation to work as honest men in other countries would be willing to do. In this same penal settlement, some years ago, a party of convicts attacked and killed three of the European overseers, and then escaped to the Island of Basilan, which lies to the south of Zamboanga. The leader of these criminals was a native named Pedro Cuevas, whose career is referred to at length in Chap. xxix.

Within half a day's journey from Manila there are several well-known marauders' haunts, such as San Mateo, Imus, Silan, Indan, the mouths of the Hagonoy River (Pampanga), etc. In 1881 I was the only European amongst 20 to 25 passengers in a canoe going to Balanga on the west shore of Manila Bay, when about midday a canoe, painted black and without the usual outriggers, bore down upon us, and suddenly two gun-shots were fired, whilst we were called upon to surrender. The pirates numbered eight; they had their faces bedaubed white and their canoe ballasted with stones. There was great commotion in our craft; the men shouted and the women fell into a heap over me, reciting Ave Marias, and calling upon all the Saints to succour them. Just as I extricated myself and looked out from under the palm-leaf awning, the pirates flung a stone which severely cut our pilot's face. They came very close, flourishing their knives, but our crew managed to keep them from boarding us by pushing off their canoe with the paddles. When the enemy came within range of my revolver, one of their party, who was standing up brandishing a bowie-knife, suddenly collapsed into a heap. This seemed to discourage the rest, who gave up the pursuit, and we went on to Balanga.

The most famous Tulisan within living memory was a Chinese half-caste named Juan Fernandez, commonly known as Tancad ("tall," in Tagalog) because of his extraordinary stature. His sphere of operations was around Bulacan, Tarlac, Morong, and Nueva Ecija. He took part in 21 crimes which could have been proved against him, and doubtless many more. A man of wonderful perception and great bravery, he was only 35 years old when he was captured in Bulacan Province by the Spanish Captain Villa Abrille. Brought before a court-martial on the specific charge of being the chief actor in a wholesale slaughter at Tayud, which caused a great sensation at the time, he and ten of his companions were executed on August 28, 1877, to the immense relief of the people, to whom the very name of Tancad gave a thrill of horror.

No one experienced in the Colony ever thought of privately prosecuting a captured brigand, for a criminal or civil lawsuit in the Philippines was one of the worst calamities that could befall a man. Between notaries, procurators, barristers, and the sluggish process of the courts, a litigant was fleeced of his money, often worried into a bad state of health, and kept in horrible suspense for years. It was as hard to get the judgement executed as it was to win the case. Even when the question at issue was supposed to be settled, a defect in the sentence could always be concocted to re-open the whole affair. If the case had been tried and judgement given under the Civil Code, a way was often found to convert it into a criminal case; and when apparently settled under the Criminal Code, a flaw could be discovered under the Laws of the Indies, or the Siete Partidas, or the Roman Law, or the Novisima Recopilacion, or the Antiguos fueros, Decrees, Royal Orders, Ordenanzas de buen Gobierno, and so forth, by which the case could be re-opened. It was the same in the 16th century (vide p. 56).

I knew a planter in Negros Island who was charged with homicide. The judge of his province acquitted him, but fearing that he might again be arrested on the same charge, he came up to Manila with me to procure a ratification of the sentence in the Supreme Court. The legal expenses were so enormous that he was compelled to fully mortgage his plantation. Weeks passed, and having spent all his money without getting justice, I lent his notary L40 to assist in bringing the case to an end. The planter returned to Negros apparently satisfied that he would be troubled no further, but later on, the newly-appointed judge in that Island, whilst prospecting for fees by turning up old cases, unfortunately came across this one, and my planter acquaintance was sentenced to eight years' imprisonment, although the family lawyer, proceeding on the same shifty lines, still hoped to find defects in the sentence in order to reverse it in favour of his client.

Availing one's self of the dilatoriness of the Spanish law, it was possible for a man to occupy a house, pay no rent, and refuse to quit on legal grounds during a couple of years or more. A person who had not a cent to lose could persecute another of means by a trumped-up accusation until he was ruined, by an "informacion de pobreza"—a declaration of poverty—which enabled the persecutor to keep the case going as long as he chose without needing money for fees. [111] A case of this kind was often started at the instigation of a native lawyer. When it had gone on for a certain time, the prosecutor's adviser would propose an "extra-judicial arrangement," to extort costs from the wearied and browbeaten defendant.

About the year 1886 there was a cause celebre, the parties being the firm of Jurado & Co. versus the Hong-Kong and Shanghai Banking Corporation. The Bank had agreed to make advances on goods to be imported by the firm in exchange for the firm's acceptances. The agreement was subject to six months' notice from the Bank. In due course the Bank had reason to doubt the genuineness of certain documents. Mr. Jurado was imprisoned, but shortly released on bail. He was dismissed from his official post of second chief of Telegraphs, worth P4,000 a year. Goods, as they arrived for his firm, were stored pending litigation, and deteriorated to only a fraction of their original value. His firm was forced by these circumstances into liquidation, and Mr. Jurado sued the Bank for damages. The case was open for several years, during which time the Bank coffers were once sealed by judicial warrant, a sum of cash was actually transported from the Bank premises, and the manager was nominally arrested, but really a prisoner on parole in his house. Several sentences of the Court were given in favour of each party. Years after this they were all quashed on appeal to Madrid. Mr. Jurado went to Spain to fight his case, and in 1891 I accidentally met him and his brother (a lawyer) in the street in Madrid. The brother told me the claim against the Bank then amounted to P935,000, and judgement for that sum would be given within a fortnight. Still, years after that, when I was again in Manila, the case was yet pending, and another onslaught was made on the Bank. The Court called on the manager to deliver up the funds of the Bank, and on his refusal to do so a mechanic was sent there to open the safes, but he laboured in vain for a week. Then a syndicate of Philippine capitalists was formed to fleece the Bank, one of its most energetic members being a native private banker in Manila. Whilst the case was in its first stages I happened to be discussing it at a shop in the Escolta when one of the partners, a Spaniard, asked me if I would like to see with my own eyes the contending lawyers putting their heads together over the matter. "If so," said he, "you have only to go through my shop and up the winding back staircase, from the landing of which you can see them any day you like at one o'clock." I accepted his invitation, and there, indeed, were the rival advocates laughing, gesticulating, and presumably cogitating how they could plunder the litigant who had most money to spend. At one stage of the proceedings the Bank specially retained a Spanish lawyer of great local repute, who went to Madrid to push the case. Later on Mr. Francis, Q.C., was sent over to Manila from Hong-Kong to advise the Bank. The Prime Minister was appealed to and the good offices of our Ambassador in Madrid were solicited. For a long time the Bank was placed in a most awkward legal dilemma. The other side contended that the Bank could not be heard, or appear for itself or by proxy, on the ground that under its own charter it had no right to be established in Manila; that, in view of the terms of that charter, it had never been legally registered as a Bank in Manila, and that it had no legal existence in the Philippines. This was merely a technical quibble. Several times when the case was supposed to be finally settled, it was again re-opened. Happily it may now be regarded as closed for ever.

A great many well-to-do natives have a mania for seeing their sons launched into the "learned professions"; hence there was a mob of native doctors who made a scanty living, and a swarm of half-lawyers, popularly called "abogadillos," who were a pest to the Colony. Up to the beginning of the 18th century the offices of solicitors and notaries were filled from Mexico, where the licences to practise in Manila were publicly sold. After that period the colleges and the university issued licences to natives, thus creating a class of native pettifogging advocates who stirred up strife to make cases, for this purpose availing themselves of the intricacies of the law.

The Spanish-Philippine Criminal Law Procedure was briefly as follows:—(1) The Judge of Instruction took the sumaria, i.e., the inquiry into whether a crime had been committed, and, if so, who was the presumptive culprit. It was his duty to find the facts and sift the case. In a light case he could order the immediate arrest of the presumptive delinquent; in a grave case he would remit it. (2) In the Court of First Instance the verbal evidence was heard and sifted, the fiscal, or prosecuting attorney, expressing his opinion to the judge. The judge would then qualify the crime, and decide who was the presumptive culprit. Then the defence began, and when this was exhausted the judge would give his opinion. This court could not acquit or condemn the accused. The opinion on the sumaria was merely advisory, and not a sentence. This inquiry was called the "vista"; it was not in reality a trial, as the defendant was not allowed to cross-examine; but, on the other hand, in theory, he was not called upon to prove his innocence before two courts, but before the sentencing court (Audiencia) only. The case would then be remitted with the sumaria, and the opinion of the Court of First Instance, to the Audiencia, or Supreme Court, for review of errors of law, but not of facts which remained. The Audiencia did not call for testimony, but, if new facts were produced, it would remit back the sumaria to the lower court, with the new written testimony added to the autos (documents in the case). These new witnesses were never confronted with the accused, and might never be seen by him, and were not cross-examined. If no new facts were elicited, the record of the lower court would be accepted by the Audiencia, errors of law being the only point at issue, and this court might at once pass sentence. In practice the Audiencia usually treated the finding of the lower court as sentence (not merely opinion), and confirmed it, if no new testimony were produced and there were no errors of law. But, although the opinion of the lower court might be practically an acquittal, the Audiencia might find errors of law, thus placing the accused twice in jeopardy. If the case were remitted back, in view of new testimony, it finally returned to the Audiencia for decision, nine judges being required to give their opinion in a grave case, so that if the Court of First Instance and five judges of the Audiencia found the accused guilty, there was a majority against him. The sentencing court was always the Audiencia. If the sentence were against the accused, a final appeal could be made, by "writ of error," to the Supreme Court of Spain, whose decision, however, rested not on facts, but on errors of law.

The (American) Insular Government tacitly admitted that the Spanish written law was excellent, notwithstanding its fulfilment being dilatory. The Spanish Penal Code has been adopted in its general application, but a new code, based on it, was in course of compilation in 1904. The application of the Spanish Code occasionally evolves some curious issues, showing its variance with fundamental American law. For instance, in September, 1905, a native adulteress having been found by her husband in flagrante delicto, he stabbed her to death. The Spanish law sustains the husband's right to slay his faithless consort and her paramour, in such circumstances (vide p. 80), but provides that the lawful slayer shall be banished from the country. The principle of this law is based on Roman law, human instinctive reasoning, and the spirit of the law among the Latin nations of Europe. American law assumes this natural act of the husband to be a crime, but whilst admitting the validity of the Spanish Code in these Islands, the American bench was puzzled to decide what punishment could be inflicted if the arraigned husband committed contempt of court by thereafter returning to his native land.



CHAPTER XV

Trade of the Islands Its Early History

From within a year after the foundation of the Colony up to the second decade of last century direct communication with Mexico was maintained by the State galleons, termed the Naos de Acapulco. The first sailings of the galleons were to Navidad, but for over two centuries Acapulco was the port of destination on the Mexican side, and this inter-communication with New Spain only ceased a few years before that Colony threw off its allegiance to the mother country. But it was not alone the troubled state of political affairs which brought about the discontinuance of the galleons' voyages, although the subsequent secession of Mexico would have produced this effect. The expense of this means of intercourse was found to be bearing too heavily upon the scanty resources of the Exchequer, for the condition of Spain's finances had never, at any period, been so lamentable.

The Commander of the State Nao had the title of General, with a salary of P40,000 per annum. The chief officer received P25,000 a year. The quarter-master was remunerated with 9 per cent, on the value of the merchandise shipped, and this amounted to a very considerable sum per voyage.

The last State galleon left Manila for Mexico in 1811, and the last sailing from Acapulco for Manila was in 1815.

These ships are described as having been short fore and aft, but of great beam, light draught, and, when afloat, had a half-moon appearance, being considerably elevated at bows and stern. They were of 1,500 tons burden, had four decks, and carried guns.

The Gov.-General, the clergy, the civil functionaries, troops, prisoners, and occasionally private persons, took passage in these ships to and from the Philippines. It was practically the Spanish Mail.

The Colony had no coin of its own. [112] It was simply a dependency of Mexico; and all that it brought in tribute and taxes to its Royal Treasury belonged to the Crown, and was at the King's disposal. For many years these payments were made wholly—and afterwards partially—in kind, and were kept in the Royal Stores. As the junks from China arrived each spring, this colonial produce belonging to the Crown was bartered for Chinese wares and manufactures. These goods, packed in precisely 1,500 bales, each of exactly the same size, constituted the official cargo, and were remitted to Mexico by the annual galleon. The surplus space in the ship was at the disposal of a few chosen merchants who formed the "Consulado,"—a trading ring which required each member to have resided in the Colony a stipulated number of years, and to be possessed of at least eight thousand pesos.

For the support of the Philippine administration Mexico remitted back to Manila, on the return of the galleon, a certain percentage of the realized value of the above-mentioned official cargo, but seeing that in any case—whether the Philippine Treasury were flourishing or not—a certain sum was absolutely necessary for the maintenance of the Colony, this remittance, known as the "Real Situado," or royal subsidy, was, from time to time, fixed. [113]

The Philippine Colony was therefore nominally self-supporting, and the Situado was only a guaranteed income, to be covered, as far as it could be, by shipments of foreign bartered manufactures and local produce to Mexico. But, as a matter of fact, the Mexican subsidy seldom, if ever, was so covered.

By Royal Decree of June 6, 1665, the Mexican subsidy to the Philippines was fixed at P2,500,000, of which P2,000,000 was remitted in coin and P500,000 in merchandise for the Royal Stores. Against this was remitted value in goods (Philippine taxes and tribute) P 176,101.40 so that the net Subsidy, or donation, from Mexico was P 2,323,898.60.

Hence, in the course of time, coin—Mexican dollars called pesos—found its way in large quantities to the Philippines, and thence to China.

The yearly value of the merchants' shipments was first limited to P250,000, whilst the return trade could not exceed P500,000 in coin or stores, and this was on the supposition that 100 per cent. profit would be realized on the sales in Mexico.

The allotment of surplus freight-room in the galleon was regulated by the issue of boletas—documents which, during a long period, served as paper money in fact, for the holders were entitled to use them for shipping goods, or they could transfer them to others who wished to do so. The demand for freight was far greater than the carrying power provided. Shipping warrants were delivered gratis to the members of the Consulado, to certain ecclesiastics, and others. Indeed, it is asserted by some writers that the Governor's favourites were served with preference, to the prejudice of legitimate trade.

The Spaniards were not allowed to go to China to fetch merchandise for transhipment, but they could freely buy what was brought by the Chinese. Indian and Persian goods uninterruptedly found their way to Manila. Spanish goods came exclusively via Mexico.

The mail galleon usually sailed in the month of July in each year, and the voyage occupied about five months. Very strict regulations were laid down regarding the course to be steered, but many calamities befell the ships, which were not unfrequently lost through the incapacity of the officers who had procured their appointments by favour. For a century and a half there was practically no competition. All was arranged beforehand as to shape, quantity, size, etc., of each bale. There was, however, a deal of trickery practised respecting the declared values, and the boletas were often quoted at high prices. Even the selling-price of the goods sent to Mexico was a preconcerted matter.

The day of the departure of the galleon or its arrival with a couple of millions of pesos or more, [114] and new faces, was naturally one of rejoicing—it was almost the event of the year. A Te Deum was chanted in the churches, the bells tolled, and musicians perambulated the streets, which were illuminated and draped with bunting.

So far as commercial affairs were concerned, the Philippine merchants passed very easy lives in those palmy days. One, sometimes two, days in the week were set down in the calendar as Saint-days to be strictly observed; hence an active business life would have been incompatible with the exactions of religion. The only misadventure they had to fear was the loss of the galleon. Market fluctuations were unknown. During the absence of the galleon, there was nothing for the merchants to do but to await the arrival of the Chinese junks in the months of March, April, and May, and prepare their bales. For a century and a half this sort of trading was lucrative; it required no smartness, no spirit of enterprise or special tact. Shippers were busy for only three months in the year, and during the remaining nine months they could enjoy life as they thought fit—cut off from the rest of the world.

Some there were who, without means of their own, speculated with the Obras Piasfunds, lent at interest. [115]

The Philippine merchants often lost the value of their shipments in the State galleons by shipwreck or seizure by enemies. Mexico frequently lost the Philippine remittances to her, and the specie she sent to the Philippines. The State galleon made only one voyage a year there and back, if all went well; but if it were lost, the shipment had to be renewed, and it often happened that several galleons were seized in a year by Spain's enemies.

The abortive attempt to annex the British Isles to the Spanish Crown in 1588 brought about the collapse of Spain's naval supremacy, enabling English mariners to play havoc with her galleons from America. The Philippine Islands, as a colony, had at that date only just come into existence, but during the series of Anglo-Spanish wars which preceded the "Family Compact" (vide p. 87), Philippine-Mexican galleons laden with treasure became the prey of British commanders, notably Admiral Anson. The coasts were beset by Anson's squadron. He was the terror of the Philippines from the year 1743. His exploits gave rise to consternation, and numerous councils were held to decide what to do to get rid of him. The captured galleon Pilar gave one-and-a-half million pesos to the enemy—the Covadonga was an immense prize. All over the Islands the Spaniards were on the alert for the dreaded foe; every provincial Governor sent look-outs to high promontories with orders to signal by beacons if the daring Britisher's ships were seen hovering about, whilst, in Manila, the citizens were forewarned that, at any moment, they might be called upon to repel the enemy.

Not only in fleets of gold-laden vessels did Spain and her dependencies lose immense wealth through her hostile ambition, for in view of the restrictions on Philippine trade, and the enormous profits accruing to the Spanish merchants on their shipments, British, Dutch, French, and Danish traders competed with them. Shippers of these nationalities bought goods in Canton, where they established their own factories, or collecting-stores. In 1731 over three millions of Mexican dollars (pesos) were taken there for making purchases, and these foreign ships landed the stuffs, etc., in contraband at the American ports, where Spaniards themselves co-operated in the trade which their absolute King declared illicit, whilst the traders considered it a natural right.

As the Southern (Peninsula) Spanish merchants were helpless to stay this competition, which greatly affected their profits, their rancorous greed made them clamour against the Philippine trade, to which they chose to attribute their misfortunes, and the King was petitioned to curtail the commerce of this Colony with Mexico for their exclusive benefit. But it was not Spanish home trade alone which suffered: Acapulco was so beset by smugglers, whose merchandise, surreptitiously introduced, found its way to Mexico City, that, in latter days, the Philippine galleons' cargoes did not always find a market. Moreover, all kinds of frauds were practised about this time in the quality of the goods baled for shipment, and the bad results revealed themselves on the Mexican side. The shippers, unwisely, thought it possible to deceive the Mexicans by sending them inferior articles at old prices; hence their disasters became partly due to "the vaulting ambition that o'erleaps itself and falls on t'other side." The Governor commissioned four of the most respectable Manila traders to inspect the sorting and classification of the goods shipped. These citizens distinguished themselves so highly, to their own advantage, that the Governor had to suppress the commission and abandon the control, in despair of finding honest colleagues. Besides this fraud, contraband goods were taken to Acapulco in the galleons themselves, hidden in water-jars.

In the time of Governor Pedro de Arandia (1754-59) the 100 per cent. fixed profit was no longer possible. Merchants came down to Acapulco and forced the market, by waiting until the ships were obliged to catch the monsoon back, or lie up for another season, so that often the goods had to be sold for cost, or a little over. In 1754 returns were so reduced that the Consulado was owing to the Obras Pias over P300,000, and to the Casa Misericordia P147,000, without any hope of repayment. The Casa Misericordia lent money at 40 per cent., then at 35 per cent., and in 1755 at 20 per cent. interest, but the state of trade made capital hardly acceptable even at this last rate.

Early in the 18th century the Cadiz merchants, jealous of the Philippine shippers, protested that the home trade was much injured by the cargoes carried to Mexico in Philippine bottoms. So effectually did they influence the King in their favour that he issued a decree prohibiting the trade between China and the Philippines in all woven stuffs, skein and woven silk and clothing, except the finest linen. Manila imports from China were thereby limited to fine linen, porcelain, wax, pepper, cinnamon, and cloves. At the expiration of six months after the proclamation of the decree, any remaining stocks of the proscribed articles were to be burnt! Thenceforth trade in such prohibited articles was to be considered illicit, and such goods arriving in Mexico after that date were to be confiscated.

By Royal Decree dated October 27, 1720, and published in Mexico by the Viceroy on February 15, 1724, the following was enacted, viz.:—That in future there should be two galleons per annum, instead of one as heretofore, carrying merchandise to Acapulco, each to be of 500 tons. That the merchandise sent in the two was to be of the value of P300,000 precisely in gold, cinnamon, wax, porcelain, cloves, pepper, etc., but not silks, or stuffs of any kind containing silk, under pain of confiscation, to be allotted in three equal parts, namely, to the Fiscal officer, the Judge intervening, and the informer, and perpetual banishment from the Indies of all persons concerned in the shipment. That the number of Manila merchants was to be fixed, and any one not included in that number was to be prohibited from trading. No ecclesiastic, or professor of religion, or foreigner could be included in the elected few, whose rights to ship were non-transferable. That if the proceeds of the sale happened to exceed the fixed sum of P600,000, on account of market prices being higher than was anticipated, only that amount could be brought back in money, and the difference, or excess, in goods. [If it turned out to be less than that amount, the difference could not be remitted in cash by Mexican merchants for further purchases, the spirit of the decree being to curtail the supply of goods from this Colony to Mexico, for the benefit of the Spanish home traders. The infringer of this regulation was subject to the penalties of confiscation and two years' banishment from the Indies.]

By Royal Decree of the year 1726, received and published in Manila on August 9, 1727, the following regulations were made known, viz.:—That the prohibition relating to silk and all-silk goods was revoked. That only one galleon was to be sent each year (instead of two) as formerly. That the prohibition on clothing containing some silk, and a few other articles, was maintained. That for five years certain stuffs of fine linen were permitted to be shipped, to the limit of 4,000 pieces per annum, precisely in boxes containing each 500 pieces.

The Southern Spanish traders in 1729 petitioned the King against the Philippine trade in woven goods, and protested against the five-years' permission granted in the above decree of 1726, declaring that it would bring about the total ruin of the Spanish weaving industry, and that the galleons, on their return to the Philippines, instead of loading Spanish manufactures, took back specie for the continuance of their traffic to the extent of three or four millions of pesos each year. The King, however, refused to modify the decree of 1726 until the five years had expired, after which time the Governor was ordered to load the galleons according to the former decree of 1720.

The Manila merchants were in great excitement. The Governor, under pretext that the original Royal Decree ought to have been transmitted direct to the Philippines and not merely communicated by the Mexican Viceroy, agreed to "obey and not fulfil" its conditions.

From the year 1720, during the period of prohibitions, the Royal Treasury lost about P50,000 per annum, and many of the taxes were not recovered in full. Besides this, the donations to Government by the citizens, which sometimes had amounted to P40,000 in one year, ceased. A double loss was also caused to Mexico, for the people there had to pay much higher prices for their stuffs supplied by Spanish (home) monopolists, whilst Mexican coffers were being drained to make good the deficits in the Philippine Treasury. The Manila merchants were terribly alarmed, and meeting after meeting was held. A Congress of Government officials and priests was convened, and each priest was asked to express his opinion on the state of trade.

Commercial depression in the Philippines had never been so marked, and the position of affairs was made known to the King in a petition, which elicited the Royal Decree dated April 8, 1734. It provided that the value of exports should thenceforth not exceed P500,000, and the amount permitted to return was also raised to P1,000,000 (always on the supposition that 100 per cent. over cost laid down would be realized). The dues and taxes paid in Acapulco on arrival, and the dues paid in Manila on starting, amounted to 17 per cent. of the million expected to return. [116] This covered the whole cost of maintenance of ships, salaries, freight, and charges of all kinds which were paid by Government in the first instance, and then recovered from the Consulado.

The fixed number of merchants was to be decided by the merchants themselves without Government intervention. Licence was granted to allow those of Cavite to be of the number, and both Spaniards and natives were eligible. Military and other professional men, except ecclesiastics, could thenceforth be of the number. Foreigners were strictly excluded. The right to ship (boleta) was not to be transferable, except to poor widows. A sworn invoice of the shipment was to be sent to the royal officials and magistrate of the Supreme Court of Mexico for the value to be verified. The official in charge, or supercargo, was ordered to make a book containing a list of the goods and their respective owners, and to hand this to the commander of the fortress in Acapulco, with a copy of the same for the Viceroy. The Viceroy was to send his copy to the Audit Office to be again copied, and the last copy was to be forwarded to the Royal Indian Council.

Every soldier, sailor, and officer was at liberty to disembark with a box containing goods of which the Philippine value should not exceed P30, in addition to his private effects. All hidden goods were to be confiscated, one-half to the Royal Treasury, one-fourth to the Judge intervening, and one-fourth to the informer; but, if such confiscated goods amounted to P50,000 in value, the Viceroy and Mexican Council were to determine the sum to be awarded to the Judge and the informer.

If the shipment met a good market and realized more than 1,000,000 pesos, only 1,000,000 could be remitted in money, and the excess in duty-paid Mexican merchandise. If the shipment failed to fetch 1,000,000, the difference could not be sent in money for making new purchases. (The same restriction as in the decree of 1720.)

The object of these measures was to prevent Mexicans supplying trading capital to the Philippines instead of purchasing Peninsula manufactures. It was especially enacted that all goods sent to Mexico from the Philippines should have been purchased with the capital of the Philippine shippers, and be their exclusive property without lien. If it were discovered that on the return journey of the galleon merchandise was carried to the Philippines belonging to the Mexicans, it was to be confiscated, and a fine imposed on the interested parties of three times the value, payable to the Royal Treasury, on the first conviction. The second conviction entailed confiscation of all the culprits' goods and banishment from Mexico for 10 years.

The weights and measures of the goods shipped were to be Philippine, and, above all, wax was to be sent in pieces of precisely the same weight and size as by custom established.

The Council for freight allotment in Manila was to comprise the Governor, the senior Magistrate, and, failing this latter, the Minister of the Supreme Court next below him; also the Archbishop, or in his stead the Dean of the Cathedral; an ordinary Judge, a Municipal Councillor, and one merchant as Commissioner in representation of the eight who formed the Consulado of merchants.

The expulsion of the non-christian Chinese in 1755 (vide p. 111) caused a deficit in the taxes of P30,000 per annum. The only exports of Philippine produce at this date were cacao, sugar, wax, and sapanwood. Trade, and consequently the Treasury, were in a deplorable state. To remedy matters, and to make up the above P30,000, the Government proposed to levy an export duty which was to be applied to the cost of armaments fitted out against pirates. Before the tax was approved of by the King some friars loaded a vessel with export merchandise, and absolutely refused to pay the impost, alleging immunity. The Governor argued that there could be no religious immunity in trade concerns. The friars appealed to Spain, and the tax was disapproved of; meantime, most of the goods and the vessel itself rotted pending the solution of the question by the Royal Indian Council.

There have been three or four periods during which no galleon arrived at the Philippines for two or three consecutive years, and coin became very scarce, giving rise to rebellion on the part of the Chinese and misery to the Filipinos. After the capture of the Covadonga by the British, six years elapsed before a galleon brought the subsidy; then the Rosario arrived with 5,000 gold ounces (nominally P80,000).

However, besides the subsidy, the Colony had certain other sources of public revenue, as will be seen by the following:—

PHILIPPINE BUDGET FOR THE YEAR 1757

Income. P cts. Stamped Paper 12,199 87 1/2 Port and Anchorage Dues 25,938 00 Sale of Offices, such as Notaries, Public Scribes, Secretaryships, etc. 5,839 12 1/2 Offices hired out 4,718 75 Taxes farmed out 28,500 00 Excise duties 4,195 00 Sale of Encomiendas, and 22 provincial govts. hired out 263,588 00 Divers taxes, fines, pardons, etc. 18,156 00 Tribute, direct tax 4,477 00 Sudsidy from Mexico 250,000 00 Deficit 79,844 00 ———- — P 697,455 75

Expenditure. P cts. Supreme Court 34,219 75 Treasury and Audit Office 12,092 00 University 800 00 Cost of the annual Galleon 23,465 00 Clergy 103,751 00 Land and sea forces all over the Philippines including offensive and defensive operations against Moros—Staff and Material 312,864 00 Salaries, Hospital and Divers Expenses 70,158 00 Remittance in Merchandise to Mexico on account of the Subsidy 140,106 00 ———- — P 697,455 75

When the merchant citizens of Manila were in clover, they made donations to the Government to cover the deficits, and loans were raised amongst them to defray extraordinary disbursements, such as expeditions against the Mahometans, etc. In the good years, too, the valuation of the merchandise shipped and the corresponding returns were underrated in the sworn declarations, so that an immensely profitable trade was done on a larger scale than was legally permitted. Between 1754 and 1759, in view of the reduced profits, due to the circumstances already mentioned, the Manila merchants prayed the King for a reduction of the royal dues, which had been originally fixed on the basis of the gross returns being equal to double the cost of the merchandise laid down in Acapulco. To meet the case, another Royal Decree was issued confirming the fixed rate of royal dues and disbursements, but in compensation the cargo was thenceforth permitted to include 4,000 pieces of fine linen, without restriction as to measure or value; the sworn value was abolished, and the maximum return value of the whole shipment was raised to one-and-a-half millions of pesos. Hence the total dues and disbursements became equal to 11 1/3 per cent. instead of 17 per cent., as heretofore, on the anticipated return value.

In 1763 the Subsidy, together with the Consulado shippers' returns, amounted in one voyage to two-and-a-half millions of pesos (vide p. 88). After the independence of Mexico (1819), tribute in kind (tobacco) was, until recently, shipped direct to Spain, and Peninsula coin began to circulate in these Islands (vide Currency).

Consequent on the banishment of the non-christian Chinese in 1755, trade became stagnant. The Philippines now experienced what Spain had felt since the reign of Phillip III., when the expulsion of 900,000 Moorish agriculturists and artisans crippled her home industries, which needed a century and a half to revive. The Acapulco trade was fast on the wane, and the Manila Spanish merchants were anxious to get the local trade into their own hands. Every Chinese shop was closed by Government order, and a joint-stock trading company of Spaniards and half-breeds was formed with a capital of P76,500, in shares of P500 each. Stores were opened in the business quarter, each under the control of two Spaniards or half-breeds, the total number of shopmen being 21. The object of the company was to purchase clothing and staple goods of all kinds required in the Islands, and to sell the same at 30 per cent. over cost price. Out of the 30 per cent. were to be paid an 8 per cent. tax, a dividend of 10 per cent. per annum to the shareholders, and the remainder was to cover salaries and form a reserve fund for new investments. The company found it impossible to make the same bargains with the Chinese sellers as the Chinese buyers had done, and a large portion of the capital was soon lost. The funds at that date in the Obras Pias amounted to P159,000, and the trustees were applied to by the company for financial support, which they refused. The Governor was petitioned; theologians and magistrates were consulted on the subject. The theological objections were overruled by the judicial arguments, and the Governor ordered that P130,000 of the Obras Pias funds should be loaned to the company on debentures; nevertheless, within a year the company failed.

A commercial company, known as the "Compania Guipuzcoana de Caracas," was then created under royal sanction, and obtained certain privileges. During the term of its existence, it almost monopolized the Philippine-American trade, which was yet carried on exclusively in the State galleons. On the expiration of its charter, about the year 1783, a petition was presented to the Home Government, praying for a renewal of monopolies and privileges in favour of a new trading corporation, to be founded on a modified basis. Consequently, a charter (Real cedula) was granted on March 10, 1785, to a company, bearing the style and title of the "Real Compania de Filipinas." Its capital was P8,000,000, in 32,000 shares of P250 each. King Charles III. took up 4,000 shares; another 3,000 shares were reserved for the friars and the Manila Spanish or native residents, and the balance was allotted in the Peninsula.

The defunct company had engaged solely in the American trade, employing the galleons; its successor left that sphere of commerce and proposed to trade with the East and Europe.

[117] "To the 'Real Compania de Filipinas' was conceded the exclusive privilege of trade between Spain and the Archipelago, with the exception of the traffic between Manila and Acapulco. Its ships could fly the Royal Standard, with a signal to distinguish them from war-vessels. It was allowed two years, counting from the date of charter, to acquire foreign-built vessels and register them under the Spanish flag, free of fees. It could import, duty free, any goods for the fitting out of its ships, or ships' use. It could take into its service royal naval officers, and, whilst these were so employed, their seniority would continue to count, and in all respects they would enjoy the same rights as if they were serving in the navy. It could engage foreign sailors and officers, always provided that the captain and chief officer were Spaniards. All existing Royal Decrees and Orders, forbidding the importation into the Peninsula of stuffs and manufactured articles from India, China, and Japan were abrogated in favour of this company. Philippine produce, too, shipped to Spain by the company, could enter duty free. The prohibition on direct traffic with China and India was thenceforth abolished in favour of all Manila merchants, and the company's ships in particular could call at Chinese ports. The company undertook to support Philippine agriculture, and to spend, with this object, 4 per cent, of its nett profits."

In order to protect the company's interests, foreign ships were not allowed to bring goods from Europe to the Philippines, although they could land Chinese and Indian wares.

By the Treaties of Tordesillas and Antwerp (q.v.), the Spaniards had agreed that to reach their Oriental possessions they would take only the Western route, which would be via Mexico or round Cape Horn. These treaties, however, were virtually quashed by King Charles III. on the establishment of the "Real Compania de Filipinas." Holland only lodged a nominal protest when the company's ships were authorized to sail to the Philippines via the Cape of Good Hope, for the Spaniards' ability to compete had, meanwhile, vastly diminished.

With such important immunities, and the credit which ought to have been procurable by a company with P8,000,000 paid-up capital, its operations might have been relatively vast. However, its balance sheet, closed to October 31, 1790 (five-and-a-half years after it started), shows the total nominal assets to be only P10,700,194, largely in unrecoverable advances to tillers. The working account is not set out. Although it was never, in itself, a flourishing concern, it brought immense benefit to the Philippines (at the expense of its shareholders) by opening the way for the Colony's future commercial prosperity. This advantage operated in two ways. (1) It gave great impulse to agriculture, which thenceforth began to make important strides. By large sums of money, distributed in anticipation of the 4 per cent, on nett profit, and expended in the rural districts, it imparted life, vigour and development to those germs of husbandry—such as the cultivation of sugar-cane, tobacco, cotton, indigo, pepper, etc.—which, for a long time had been, and to a certain extent are still, the staple dependence of many provinces. (2) It opened the road to final extinction of all those vexatious prohibitions of trade with the Eastern ports and the Peninsula which had checked the energy of the Manila merchants. It was the precursor of free trade—the stepping-stone to commercial liberty in these regions.

The causes of its decline are not difficult to trace. Established as it was on a semi-official basis, all kinds of intrigues were resorted to—all manner of favouritism was besought—to secure appointments, more or less lucrative, in the Great Company. Influential incapacity prevailed over knowledge and ability, and the men intrusted with the direction of the company's operations proved themselves inexperienced and quite unfit to cope with unshackled competition from the outer world. Their very exclusiveness was an irresistible temptation to contrabandists. Manila private merchants, viewing with displeasure monopoly in any form, lost no opportunity of putting obstacles in the way of the company. Again, the willing concurrence of native labourers in an enterprise of magnitude was as impossible to secure then as it is now. The native had a high time at the expense of the company, revelling in the enjoyment of cash advances, for which some gave little, others nothing. Success could only have been achieved by forced labour, and this right was not included in the charter.

In 1825 the company was on the point of collapse, when, to support the tottering fabric, its capital was increased by P12,500,000 under Real Cedula of that year, dated June 22. King Charles IV. took 15,772 (P250) shares of this new issue. But nothing could save the wreck, and finally it was decreed, by Real Cedula of May 28, 1830, that the privileges conceded to the "Real Compania de Filipinas" had expired—and Manila was then opened to Free Trade with the whole world. It marked an epoch in Philippine affairs.

In 1820 the declared independence of Mexico, acknowledged subsequently by the European Powers, forced Spain to a decision, and direct trade between the Philippines and the mother country became a reluctant necessity. No restrictions were placed on the export to Spain of colonial produce, but value limitations were fixed with regard to Chinese goods. The export from the Philippines to Acapulco, Callao, and other South American ports was limited to P750,000 at that date. In the same year (1820) permission was granted for trade between Manila and the Asiatic ports. Twenty-two years afterwards one-third of all the Manila export trade was done with China.

When the galleons fell into disuse, communication was definitely established with Spain by merchant sailing ships via the Cape of Good Hope, whilst the opening of the Suez Canal (1869) brought the Philippines within 32 days' journey by steamer from Barcelona.

The voyage via the Cape of Good Hope occupied from three to six months; the sailings were less frequent than at the present day, and the journey was invariably attended with innumerable discomforts. It was interesting to hear the few old Spanish residents, in my time, compare their privations when they came by the Cape with the luxurious facilities of later times. What is to-day a pleasure was then a hardship, consequently the number of Spaniards in the Islands was small; their movements were always known. It was hardly possible for a Spaniard to acquire a sum of money and migrate secretly from one island to another, and still less easy was it for him to leave the Colony clandestinely.

The Spaniard of that day who settled in the Colony usually became well known during the period of the service which brought him to the Far East. If, after his retirement from public duty, on the conclusion of his tenure of office, he decided to remain in the Colony, it was often due to his being able to count on the pecuniary support and moral protection of the priests. The idea grew, so that needy Spaniards in the Philippines, in the course of time, came to entertain a kind of socialistic notion that those who had means ought to aid and set up those who had nothing, without guarantee of any kind: "Si hubiera quien me proteja!" was the common sigh—the outcome of Caesarism nurtured by a Government which discountenanced individual effort. Later on, too, many natives seemed to think that the foreign firms, and others employing large capital, might well become philanthropic institutions, paternally assisting them with unsecured capital. The natives were bred in this moral bondage: they had seen trading companies, established under royal sanction, benefit the few and collapse; they had witnessed extensive works, undertaken por via de administracion miscarry in their ostensible objects but prosper in their real intent, namely, the providing of berths for those who lived by their wits.

The patriarchal system was essayed by a wealthy firm of American merchants (Russell & Sturgis) with very disastrous results to themselves. They distributed capital all over the Colony, and the natives abused their support in a most abominable manner. A native, alleging that he had opened up a plantation, would call on the firm and procure advances against future crops after scant inquiry. Having once advanced, it was necessary to continue doing so to save the first loans.

Under the auspices of the late Mr. Nicholas Loney, great impulse was given to the commerce of Yloilo, and, due to his efforts, the Island of Negros was first opened up. His memory is still revered, and he is often spoken of as the original benefactor to the trading community of that district. Russell & Sturgis subsequently extended their operations to that locality. The result was that they were deceived in every direction by the natives, who, instead of bringing in produce to pay off advances, sent their sons to college, built fine houses, bought pianos, jewellery, etc., and in a hundred ways satisfied their pride and love for outward show in a manner never known before, at the expense of the American capitalists. As bankers, the firm enjoyed the unlimited confidence of those classes who had something to lose as well as to gain; hence it is said that, the original partners having withdrawn their money interest, the firm endeavoured to continue the business with a working capital chiefly derived from the funds deposited by private persons at 8 per cent, per annum. All might have gone well but for the rascality of the native agriculturists, who brought about the failure of the house in 1875 by taking loans and delivering no produce. The news amazed everybody. Trade was, for the moment, completely paralyzed. The great firm, which for years had been the mainspring of all Philippine mercantile enterprise, had failed! But whilst many individuals suffered (principally depositors at interest), fifty times as many families to-day owe their financial position to the generosity of the big firm; and I could mention the names of half a dozen real-estate owners in Yloilo Province who, having started with nothing, somehow found themselves possessing comparatively large fortunes at the time of the liquidation.

Consequent on the smash, a reaction set in which soon proved beneficial to the Colony at large. Foreign and Spanish houses of minor importance, which had laboured in the shade during the existence of the great firm, were now able to extend their operations in branches of trade which had hitherto been practically monopolized.



Before Manila was opened to foreign trade, even in a restricted form, special concessions appear to have been granted to a few traders. One writer mentions that a French mercantile house was founded in Manila many years prior to 1787, and that an English firm obtained permission to establish itself in 1809. In 1789 a foreign ship was allowed to enter the port of Manila and to discharge a cargo. This would appear to have been the first. In olden times the demand for ordinary foreign commodities was supplied by the Chinese traders and a few Americans and Persians. During the latter half of the 18th century a Spanish man-of-war occasionally arrived, bringing European manufactures for sale, and loaded a return cargo of Oriental goods.

The Philippine Islands were but little known in the foreign markets and commercial centres of Europe before the middle of the 19th century. Notwithstanding the special trading concessions granted to one foreigner and another from the beginning of last century, it was not until the port of Manila was unrestrictedly opened to resident foreign merchants in 1834 that a regular export trade with the whole mercantile world gradually came into existence.

It is said that whilst the charter of the "Real Compania de Filipinas" was still in force (1785-1830) a Mr. Butler [118] solicited permission to reside in and open up a trade between Manila and foreign ports; but his petition was held to be monstrous and grievously dangerous to the political security of the Colony; hence it was rejected. The Spaniards had had very good reason to doubt foreign intercourse after their experience of 1738, when they preferred a war with England to a gross abuse of the Asiento contract entered into under the Treaty of Utrecht. [119] Subsequently the American firm already mentioned, Russell & Sturgis, made a request to be allowed to trade, which, having the support of the Gov.-General of the day, was granted; and Mr. Butler, taking advantage of this recent precedent, also succeeded in founding a commercial house in Manila. To these foreigners is due the initiation of the traffic in those products which became the staple trade of the Colony and paved the way for the bulk of the business being, as it is to-day, in the hands of European and American merchants.

The distrustful sentiment of olden times (justifiable in the 18th century) pervaded the Spaniards' commercial and colonial policy up to their last day. Proposed reforms and solicitations for permission to introduce modern improvements were by no means welcomed. In the provinces clerical opposition was often cast against liberal innovations, and in the Government bureaux they were encompassed with obstructive formalities, objections, and delays. [120]

By Royal Ordinance of 1844 strangers were excluded from the interior; in 1857 unrepealed decrees were brought forward to urge the prohibition of foreigners to establish themselves in the Colony; and, as late as 1886, their trading here was declared to be "prejudicial to the material interests of the country." [121]

The support of the friars referred to in p. 255 became a thing of the past. Colonists had increased tenfold, the means of communication and of exit were too ample for the security of the lenders, who, as members of religious communities, could not seek redress at law, and, moreover, those "lucky hits" which were made by penniless Europeans in former times by pecuniary help "just in the nick of time" were no longer possible, for every known channel of lucrative transaction was in time taken up by capitalists.

It was the capital brought originally to the Philippines through foreign channels which developed the modern commerce of the Colony, and much of the present wealth of the inhabitants engaged in trade and agriculture is indirectly due to foreign enterprise. Negros Island was entirely opened up by foreign capital. In Manila, the fathers of many of the half-castes and pure natives who at this day figure as men of position and standing, commenced their careers as messengers, warehouse-keepers, clerks, etc., of the foreign houses.

There were a great many well-to-do Spaniards in trade, but few whose funds on starting were brought by them from the Peninsula. The first Spanish steamer-owner in the Colony, a baker by trade, owed his prosperity to the support of Russell & Sturgis. One of the richest Spanish merchants (who died in 1894) once kept a little grocer's shop, and after the failure of Russell & Sturgis he developed into a merchant and shipowner whose firm became, in time, the largest Spanish house operating in hemp and other produce.

About 14 Spanish firms of a certain importance were established in Manila, Yloilo, and Cebu, in addition to the Europeans trading here and there on the coasts of the Islands. In Manila there were (and are still) two foreign bank branches [122] (one with a sub-branch in Yloilo), three bank agencies, and the Philippine private banking-house of J. M. Tuason & Co.; also the "Banco Espanol-Filipino," which was instituted in 1852, with a capital of P400,000, in 2,000 shares of P200 each. The capital was subsequently increased to P600.000. [123] Authorized by charter, it issued notes payable to bearer on demand from P10 upwards. The legal maximum limit of note issue was P1,200,000, whilst the actual circulation was about P100,000 short of that figure. This bank did a very limited amount of very secure business, and it has paid dividends of 12 to 15 per cent.; hence the shares were always at a premium. In 1888, when 12 per cent, dividend was paid, this stock was quoted at P420; in 1895 it rose to P435. The Obras Pias funds (vide p. 245) constituted the orginal capital of the bank. The new position of this institution, under the (American) Insular Government since 1905, is explained in Chapter xxxi.

The first Philippine bank was opened in Manila by a certain Francisco Rodriguez about the year 1830.

From the conquest up to the year 1857 there was no Philippine coinage. Mexican dollars were the only currency, and in default of subsidiary money these dollars, called pesos, were cut. In 1764 cut money was prohibited, and small Spanish silver and copper coins came to the Islands. In 1799 the Gov.-General forbade the exportation of money, and fixed the peso at 8 reales fuertes and the real at 17 cuartos. Shortly afterwards gold came to the Islands, and was plentiful until 1882. In 1837 other copper coins came from Spain, and the real fuerte was fixed at 20 cuartos. In 1857 the Manila mint was established, pesetas were introduced, five being equal to one peso, and 32 cuartos being equal to one peseta. Contemporaneously the coinage in Spain was 34 cuartos to one peseta and 5 pesetas to one duro—the coin nominally equivalent to the peso—but the duro being subdivided into 20 reales vellon, the colonial real fuerte came to be equivalent to 2 1/2 reales vellon. The evident intention was to have one common nominal basis (peso and duro), but subdivided in a manner to limit the currency of the colonial coinage to its own locality. With pesos, reales, cuartos, maravedis, and ounces of gold, bookkeeping was somewhat complicated; however, the Government accounts were rendered easy by a decree dated January 17, 1857, which fixed pesos and cents for official reckoning. Merchants then adopted this standard. Up to 1860 gold was so abundant that as much as 10 per cent, was paid to exchange an onza of gold (P16) for silver. In 1878 gold and silver were worth their nominal relative values. Gold, however, has gradually disappeared from the Colony, large quantities having been exported to China. In 1881 the current premium for purchasing gold was 2 per cent., and at the beginning of 1885 as much as 10 per cent. premium was paid for Philippine gold of the Isabella II or any previous coinage. The gold currency of Alfonso XII. (1875-85) was always of less intrinsic value than the coin of earlier date, the difference averaging about 2 per cent. At the present day gold could only be obtained in very limited quantities at about the same rate as sight drafts on Europe. Philippine gold pieces are rare.

In 1883 Mexican dollars of a later coinage than 1877 were called in, and a term was fixed after which they would cease to be legal tender. In 1885 decimal bronze coins were introduced. In July, 1886, a decree was published calling in all foreign and Chinese chop dollars [124] within six months, after which date the introducer of such coin into the Colony would be subject to the penalty of a fine equal to 20 per cent. of the value imported, the obligation to immediately re-export the coin, and civil action for the misdemeanour. At the expiration of the six months the Treasury was not in a position to effect the conversion of the foreign medium in private hands prior to the publication of the decree. The term was extended, but in time the measure became practically void, so far as the legal tender was concerned. However, the importation of Mexican dollars was still prohibited; but, as they remained current in Manila at par value, whilst in Hong-Kong and Singapore they could be bought for 8 to 12 per cent, (and in 1894 25 per cent.) less than Manila dollars, large quantities were smuggled into the Colony. It is estimated that in the year 1887 the clandestine introduction of Mexican dollars into Manila averaged about P150,000 per month. I remember a Chinaman was caught in September, 1887, with P164,000, imported in cases declared to contain matches. In 1890 there was a "boom" in the silver market. Owing to the action of the American Silverites, the Washington Treasury called for a monthly supply of 4,000,000 of silver dollars; consequently sight rate on London in Hong-Kong touched 3s. 10 1/4d., and in Manila rose to 3s. 10 1/2d., but a rapid reaction set in when the Treasury demand ceased. In 1895 we heard in Manila that the Government were about to coin Philippine pesos and absolutely demonetize Mexicans as a medium in the Islands. But this measure was never carried out, probably because the Government had not the necessary cash with which to effect the conversion. Some few Philippine peso pieces were, however, put into circulation concurrently with the Mexican pesos.