The Imperative to Reform: State and Societies, 1764-1898

Chapter Four State and Societies, seventeen sixty-four to eighteen ninety-eight

THE IMPERATIVE TO REFORM

In the late eighteenth century, Spain was compelled to reconsider the way it ruled the Philippines, as external realities intruded on the isolated life of the colony. Most dramatically, the rise of British power and temporary loss of Manila exposed the state's weakness in defense and control of the population. More fundamental still was economic change. The galleon trade had begun losing money as European merchants and smugglers used the maritime peace enforced by Britain's navy to trade directly with China. British rule then opened the Philippines to world trade, and the Spanish state was unable to reverse this trend or stop the illegal entry of commodities into the colony.

After almost two hundred fifty years, the galleon trade ended with the last eastbound ship leaving the Philippines in eighteen eleven, the last westbound ship in eighteen fifteen. In the next ten years, Mexican revolutionaries won independence and Spain's American empire dwindled to a few Caribbean islands. The Philippines lost both customs revenue and its commercial raison d'être and was forced to make administrative and economic changes to survive. Exiles from Spanish America complicated this process, competing for jobs and influence with Philippine-born Spaniards. Ironically, the challenge of creating a modern colonial state and economy was faced in the imperial periphery just as much of the empire was lost.

But Spain's decline was offset by economic growth and industrialization in the wider world that created new markets for raw materials. The development of Philippine agricultural and mineral resources was therefore the logical replacement for the galleon trade. This development would make land-hitherto underexploited-a more important resource, and Manila and other port cities would become commercial, managerial, and professional centers. The object was to create a unified colonial economy out of the separate indo, Chinese, and Spanish sectors and to modernize the state in order to promote and benefit from these changes.

THE NEW ECONOMY

Export Agriculture

The reorientation of the colonial economy began with the arrival in seventeen seventy-eight of Governor-General José de Basco y Vargas, who saw the futility of the galleon trade and the potential for large-scale production of cash crops for export. He encouraged Spaniards to invest in the cultivation of spice plants; of silk, cotton, indigo, and hemp; of fruit trees, sugarcane, cacao, and coconut. He tried to spur local manufacturing to limit the silver drain. And he established the Royal Company of the Philippines in seventeen eighty-five to finance these projects and handle the new trade he envisioned with Europe, other Spanish colonies, and the rest of Asia. Unfortunately, his proposals met with "profound and general silence." Resistance came from friars who opposed changes in the labor force and from others with vested interests in the galleon trade. Although the Royal Company did promotional work and started pilot projects, it failed to introduce the new skills and scientific knowledge lacking in the friar-dominated educational curriculum.

Basco was able to accomplish a few things, however: He repealed the ban on Chinese merchants, which helped bring internal trade back to life; he began to open Manila to foreign traders, both Asian and non-Asian; and he established the tobacco monopoly. This last enterprise was a "tax farm"-a government-auctioned right to produce, sell, and/or operate a monopoly. Later examples included liquor, meat-slaughtering, municipal tax collection, and cockfighting. For colonial governments in the eighteenth and nineteenth centuries, tax farming was a common source of revenue that spared them the expense of developing state capacity in revenue collection. The tobacco monopoly was successful in several ways. First, the state, paid in advance on a yearly basis, was able to remit revenues to Spain. Second, the cultivation of tobacco led to the production of cigars, which became the Philippines' only major manufactured export in the nineteenth century. And finally, the clearing of forested land for tobacco pioneered the way for other commercial crops-especially abaca and sugar-to be cultivated in interior and mountainous regions of the colony.

Change came more rapidly with the end of the galleon trade, which was a money-losing business in its last two decades. When it ended, the Spanish lost all remaining control of the Philippines' foreign trade, for the Royal Company had been reduced to a shambles by mismanagement, friar opposition, and waning interest on the part of Manila merchants. In eighteen thirty-four, the company was abolished, and Manila was officially opened for trade and residence to merchants of any nationality coming from any foreign port. At the same time, discrimination against Chinese ships trading at Manila ended; henceforth all ships were subject to the same taxes and procedures. In the following decade, the trading privileges of alcaldes mayores (provincial governors) and military governors were abolished in order to stimulate private trade. This opportunity, though meant for Spaniards coming to the Philippines looking for work, was taken up by Chinese immigrants who played an important role in the development of cash cropping.

When Basco allowed the Chinese to return in seventeen seventy-eight, their numbers were officially limited to a "necessary" four thousand, the Parián was reestablished, and a capitation (head) tax was imposed. As priorities shifted to economic development from the eighteen thirties, however, policy changed to encourage immigration and eliminate restrictions on movement. The new immigrants fanned out beyond the urban Spanish settlements of previous generations to the places where export crops were being produced. They initially faced competition from Chinese mestizos who had taken up wholesaling and provisioning urban areas during the previous century. But the new immigrants were able to reclaim their role and expand it-linking provincial producers to the world market-through a combination of well-placed agents and credit from Western commercial firms. The latter were British and some American trading companies that advanced imported goods on credit, allowing Chinese businesses to operate with little of their own capital. In the absence of government direction, the firms also conveyed demand information from foreign markets, guiding producers' planting decisions-a key factor in the development of sugar plantations.

So Basco's ideas were eventually realized. In the first decade of the nineteenth century-the last of the galleon trade-exports of Philippine origin accounted for less than ten percent of the value of total exports, and many of these were harvested forest or sea products such as bird's nest, mother-of-pearl, tortoise shell, sea cucumber, and timber. By the eighteen forties, though, almost ninety percent of total export revenue came from six Philippine-grown cash crops: sugar, tobacco, abaca (hemp) fiber and cordage, indigo, coffee, and cotton. Throughout the colony, the cash economy replaced trade in kind, and by the eighteen thirties only three provinces still paid tribute in rice. In the eighteen fifties and eighteen sixties, the ports of Iloilo and Cebu opened to foreign shipping, stimulating trade and agriculture in the Visayas. Soon new tracts of forestland on Negros Island were cleared for sugar.

As exports rose, economic life became more complex and "metropolitan Manila"-Intramuros and its growing suburbs-grew into a real commercial center. The city's opening to foreign traders made it a port of call for ships from India, China, and as far away as the east coast of the United States. It contained people enjoying more diverse jobs, more money transactions, and more cultural diversions. Manila's population increased from one hundred thousand in eighteen twenty-two to about one hundred fifty thousand by mid-century. There was no strict enumeration until nineteen oh three, so all population estimates are based on tribute lists and parish records of births and deaths. Most of this population growth came from migration to the city. According to demographer Daniel F. Doeppers, "Manila's population in the early eighteen nineties was primarily derived from two zones of intense interaction facilitated by water transportation-from around Manila Bay and the short Pasig River... and across the South China Sea from the coastal core of riverine southern Fujian... both long-standing patterns of circulation."

The steady stream of internal migrants in the nineteenth century came mainly from the nearby Tagalog-speaking provinces that had long supplied Manila with its basic necessities. People migrated to the city for a variety of reasons-some found increased economic and educational opportunities, others were driven by loss of livelihood caused by the importation of cheap manufactured textiles from Britain. Both Chinese and internal migrants were