Chapter 2b

Restrictions On Trade Icon

April 25, 2022

The Manila merchants were used to a lucrative trade with Acapulco.

The Crown purchased the Indian and Chinese merchandise for its return freights from Manila at double their original value.

  • This was a considerable source of profit to them, yet they strenuously resisted this innovation.

In 1784, however, these galleons made their last trip.

  • At first, the maximum value of the imports only was limited. The Manila merchants were not over-scrupulous in making false statements as to their worth. To end this malpractice, a limit was placed to the amount of silver exported. According to Mas, however, the silver illegally exported was 6-8 times the prescribed limit.

After the English invasion, European vessels were forbidden to visit Manila.

But Manila needed Indian merchandise. These had to be imported in English and French ships which:

  • assumed a Turkish name
  • were provided with a sham Indian captain.

In 1785, the “Compania" of the Philippines obtained a monopoly of the trade between Spain and the Philippines. But it was not allowed to interfere with the direct traffic between Acapulco and Manila. It was meant to acquire large quantities of colonial produce, silk, indigo, cinnamon, cotton, pepper, etc for export. But as it was unable to obtain compulsory labour, it entirely failed in its attempted artificial development of agriculture.

The “Compania” suffered great losses through:

  • its erroneous system of operation
  • the incapacity of its officials
    • It paid, for example, 13 dollars for pico pepper, which cost from 3 to 4 dollars in Sumatra.

In 1789, foreign ships were allowed to import Chinese and Indian produce, but none from Europe.

In 1809, an English commercial house obtained permission to establish itself in Manila.*

In 1814, after the peace with France, the same permission, with more or less restrictions, was granted to all foreigners.

In 1820, the direct trade between the Philippines and Spain was made open, without any limitations to the export of colonial produce, on the condition that the value of the Indian and Chinese goods in each expedition should not exceed 50,000 dollars.

  • Lapérouse mentions a French firm that, in 1787, had been for many years established in Manila.

Ever since 1834, when the privileges of the “ Compania” expired, free trade has been permitted in Manila.

Foreign ships, however, were charged double dues.

Four new ports were opened to general trade since 1855.

In 1869, the liberal tariff previously alluded to was issued.

After 300 years of Spanish rule, Manila did not add to the importance that it had shortly after the advent of the Spaniards.

This was caused by:

  • The isolation of Japan and the IndoChinese empires because of the pretensions of the Catholic missionaries*
  • the secession of the colonies on the west coast of America
  • above all, the long continuance of a distrustful commercial and colonial policy (a policy which exists even today)
  • the establishment of important markets, based on large capital and liberal principles, in the most favoured spots of the British and Dutch Indies

These threw the Chinese trade into other channels.

The cause is as clear as the effect. Yet it might be erroneous to ascribe the policy so long pursued to shortsightedness.

Spanish colonisation had partly a religious purpose. The Spanish government discovered a great source of influence in the disposal of the extremely lucrative colonial appointments.

The crown itself, as well as its favourites, only thought of extracting the most from the Philippines. It had neither the intention nor the power to develop the country’s natural wealth by agriculture and commerce.

  • Inseparable from this policy, was the persistent exclusion of foreigners.
  • It seemed even more necessary in the isolated Philippines than in America to cut off the natives from all contact with foreigners, if the Spaniards had any desire to remain in undisturbed possession of the colony.

In face, however, of the developed trade of today and the claims of the world to the productive powers of such an extraordinarily fruitful soil, the old restrictions can no longer be maintained. The recently introduced liberal tariff is a thoroughly well-timed measure.

  • R. Cocks to Thomas Wilson (calendar of State Papers, India, No. 823) …. “The English will obtain a trade in China, so they bring not in any padrese (as they term them), which the Chinese cannot abide to hear of, because heretofore they came in such swarms, and are always begging without shame."
  • As late as 1867 some old decrees, passed against the establishment of foreigners, were renewed. A royal ordinance of 1844 prohibits the admission of strangers into the interior of the colony under any pretext whatsoever.


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

In the days of Morga, towards the close of the 16th century, 30-40 Chinese junks visit Manila (generally in March) annually. Towards the end of June, a galleon used to sail for Acapulco.

The active trade with Acapulco were limited to the 3 central months of the year. It was so lucrative, easy, and certain, that the Spaniards scarcely cared to engage in any other undertakings.

The carrying power of the annual galleon was not enough to meet the demand for cargo room. The Governor divided it as he deemed best; the favourites.

, however, to whom he assigned shares in the hold, seldom traded themselves, but parted with their concessions to the merchants.

According to De Guignes,* the hold of the vessel was divided into 1,500 parts. The majority were allotted to the priests, and the rest to distinguished persons.

The value of the cargo was officially limited to 600,000 dollars. But it was considerably higher.

It chiefly consisted of Indian and Chinese cottons and silk stuffs (amongst others 50,000 pairs of silk stockings from China), and gold ornaments. The value of the return freight was 2-3 million dollars.

  • Vide Pinkerton.

Everything in this trade was settled beforehand. The number, shape, size, and value of the bales, and even their selling price.

This was usually double the original cost, the permission to ship goods to a certain amount was equivalent, under ordinary circumstances, to the bestowal of a present of a like value.

These permissions or licences (boletas) were, at a later period, usually granted to pensioners and officers’ widows, and to officials, in lieu of an increase of salary.

These favourites of fortune were forbidden however to make a direct use of them, for to trade with Acapulco was the sole right of those members of the Consulado (a kind of chamber of commerce) who could boast a long residence in the country and the possession of a capital of at least 8,000 dollars.

Legentil, the astronomer, gives a full description of the regulations which prevailed in his day and the manner in which they were disobeyed.

The cargo consisted of 1,000 bales. Each was composed of four packets,* the maximum value of each packet being fixed at 250 dollars.

It was impossible to add to the amount of bales, but they pretty generally consisted of more than four packets, and their value so far exceeded the prescribed limits, that a boleta was considered to be worth from 200 to 225 dollars.

The officials took good care that no goods should be smuggled on board without a boleta. These were in such demand, that, at a later period, Comynt had to pay 500 dollars for the right to ship goods, the value of which scarcely amounted to 1,000.

The merchants usually borrowed the money for these undertakings from the obras pias, pious endowments, which, up to our own time, fulfil in the islands the purposes of banks. In the early days of

  • Each packet was 6X2}x1}=18.75 Span. cub. ft. St. Croix. + Vide Comyn’s “ Comercio exterior.”

The obras pias were pious legacies which usually stipulated that 2/3 of the trade, the galleon used to leave Cavite in July and sail with a north-westerly wind beyond the tropics, until it met with a west wind between the 30th and 40th parallel.*

Later on the vessels were ordered to leave Cavite with the first south-westerly wind, to sail along the south coast of Luzon, through the St. Bernardino straits, and to continue along the thirteenth parallel of north latitudet as far to the east as possible, until the northeasterly trade wind compelled them to seek a north-west breeze in higher latitudes. They were then obliged to try the 30th parallel as long as possible, instead of as formerly the thirtyseventh.

The captain of the galleon was not permitted to sail immediately northward, although to have done so would have procured him a much quicker and safer passage, and would have enabled him to reach the rainy zone more rapidly.

To effect the last was a matter of the greatest importance to him, for his vessel, overladen with merchandise, had but little room left for water; and, although he had a crew of from 400 to 600 hands to provide for, he was instructed to depend upon the rain he caught on the voyage ; for which purpose, the galleon was provided with suitable mats and bamboo pails.

Their value should be advanced at interest for the furtherance of maritime commercial undertakings until the premiums, which for a voyage to Acapulo amounted to 50, to China 25, and to India 35 per cent., had increased the original capital to a certain amount.

The interest of the whole was then to be devoted to masses for the founders, or to other pious and benevolent purposes. A third was generally kept as a reserve fund to cover possible losses. The Government long since appropriated these reserve funds as compulsory loans,“ but they are still considered as existing."

When the trade with Acapulco came to an end, the principals could no longer be laid out according to the intentions of the founders, and they were lent out at interest in other ways. By a royal ordinance of the 3rd November, 1854, a junta was appointed to administer the property of the obras pias. The total capital of the five endowments (in reality only four, for one of them no longer possessed anything) amounted to nearly 1m dollars.

The profits from the loans were distributed according to the amounts of the original capitals, which, however, no longer existed in cash, as the Government had disposed of them.

  • Vide “Thevenot." † According to Morga, between the fourteenth and fifteenth. Ş Vide De Guignes, Pinkerton, and Anson.

Voyages in these low latitudes were, owing to the inconstancy of the winds, extremely troublesome, and often lasted five months and upwards. The fear of exposing the costly cumbrous vessel to the powerful and frequently stormy winds of the higher latitudes, appears to have been the cause of these sailing orders.

As soon as the galleon had passed the great Sargasso shoal, it took a southerly course, and touched at the southern point of the Californian peninsula (Saint Lucas), where news and provisions awaited it.*

In their earlier voyages, however, they must have sailed much further to the north, somewhere in the neighbourhood of Cape Mendocino, and have been driven southward in sight of the coast ; for Vizcaino, in the voyage of discovery he undertook in 1603, from Mexico to California, found the principal mountains and capes, although no European had ever set his foot upon them, already christened by the galleons, to which they had served as landmarks.t

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

A galleon was usually of from 1,200 to 1,500 tons burden, and carried fifty or sixty guns. The latter, however, were pretty generally banished to the hold during the eastward voyage. When the ship’s bows were turned towards home, and there was no longer any press of space, the guns were remounted.

Fray Gaspar says of the Santa Anna, which Thomas Candish * Vide Anson." + Randolph’s “ History of California."

In Morga’s time the galleons took seventy days to the Ladrone islands, from ten to twelve from thence to Cape Espiritu Santo, and eight more to Manila.

I A very good description of these voyages may be found in the 10th chapter of Anson’s work, which also contains a copy of a sea map, captured in the Cavadonga, displaying the proper track of the galleons to and from Acapulco.

captured and burnt in 1586 off the Californian coast : “Our people suiled so carelessly that they used their guns for ballast the pirate’s venture was such a fortunate one that he returned to London with sails of Chinese damask and silken rigging."

The cargo was sold in Acapulco at a 100% profit and was paid for in silver, cochineal, quicksilver, etc.

The total value of the return freight was between 2-3 million dollars,* of which at least 0.25 million went to the king.

The return of a galleon to Manila, laden with silver dollars and new arrivals, was a great holiday for the colony. A con

gaming table, was soon spent by the crew; when matters returned to their usual lethargic state. It was no unfrequent event, however, for vessels to be lost. They were too often laden with a total disregard to seaworthiness, and wretchedly handled by officers who disobeyed their orders and set caution at defiance.

It was favour, not capacity, that determined the patronage of these lucrative appointments.†

Many galleons fell into the hands of English and Dutch cruisers. But these tremendous profits gradually decreased when the Compania obtained the right to import Indian cotton into New Spain by way of Vera Cruz, subject to a 6% customs duty and when English and American adventurers began to smuggle these and other goods into the country.*

• De Guignes.

  • The officer in command of the expedition, to whom the title of general was given, had always a captain under his orders, whose share in the gain of each trip amounted to 40,000 dollars. The pilot was content with 20,000. The first lieutenant (master) was entitled to 9 per cent. on the sale of the cargo, and pocketed from this and from the profits of his own private ventures upwards of 350,000 dollars. (Vide Arenas.)

I The value of the cargoes Anson captured amounted to 1,313,000 dollars, besides 36,682 ounces of fine silver and cochineal. While England and Spain were at peace, Drake plundered the latter to the extent of at least one and a half million of dollars. Thomas Candish burnt the rich cargo of the Santa Anna, as he had no room for it on board his own vessel.

. For instance, in 1786 the San Andrés, which had a cargo on board valued at 2 million, found no market for it in Acapulco. The same thing happened in 1787 to the San José, and a second time in 1789 to the San Andrés.

Spanish dollars found their way to China and the further Indies through the galleons, where they circulate to this day.