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.

In June, 1903, the ss. _Don Juan_, owned by Francisco L. Rojas, of Manila, took on board in Hong-Kong about $400,000 Mexicans (i.e., pesos) for the purpose of smuggling them into Manila. On board there were also, as passengers, a Senor Rodoreda and a crowd of Chinese coolies. The vessel caught fire off the west coast of Luzon. The captain, the crew, and the Spanish passenger abandoned the ship in boats, leaving the Chinese to their awful fate. A steam launch was sent alongside and saved a few dollars, whilst the despairing Chinese became victims to the flames and sharks. The ship's burnt-out hull was towed to Manila Bay. The remaining dollars were confiscated, and the captain and chief engineer were prosecuted.

The universal monetary crisis due to the depreciation of silver was experienced here, and the Government made matters still worse by coining half-pesos and 20-cent pieces, which had not the intrinsic value expressed, and exchange consequently fell still lower. In September, 1887, a Madrid periodical, _Correo de Espana_, stated that the bastard Philippine 50-cent pieces were rejected in Madrid even by money-changers. In May, 1888, the peso was quoted at 3s.2 3/4d. (over 19 per cent. below nominal value), and shippers to the Colony, who had already suffered considerably by the loss on exchange, had their interests still further impaired by this action of the Treasury. For Exchange Fluctuations _vide_ Chap, xxxi., "Trade Statistics."

A Custom-house was established and port opened in Zamboanga (Mindanao Is.) for direct communication with abroad in 1831; those of Sual (Pangasinan) and Yloilo (Panay Is.) in 1855, and that of Cebu in 1863. The Custom-house of Sual was subsequently abolished, and the port having been closed to direct foreign trade, the place has lost its former importance, and lapsed into the state of a lifeless village.

Special permission could be obtained for ships to load in and sail direct from harbours where no Custom-houses were established, on a sum of money being lodged beforehand at the _Caja de Depositos _in Manila, to cover duties, dues, etc., to be assessed.

After the opening of the port of Yloilo, three years elapsed before a cargo of produce sailed thence to a foreign port. Since then it has gradually become the shipping centre for the crops (chiefly sugar and sapanwood) raised in the islands of Panay and Negros. From about the year 1882 to 1897 it attracted a portion of what was formerly the Cebu trade. Since then the importance of Yloilo has diminished. Its development as a port was entirely due to foreigners, and considerably aided agriculture in the Visayas Islands. Heretofore the small output of sugar (which had never reached 1,000 tons in any year) had to be sent up to Manila. The expense of local freight, brokerages, and double loading and discharging left so little profit to the planters that the results were then quite discouraging. None but wooden sugar-cane mills were employed at that time, but since then many small steam-power factories have been erected (_vide_ Sugar). The produce shipped in Yloilo [125] was principally carried to the United States in American sailing-ships.

For figures relating to Chief Exports from the various ports, _vide_ Chap. xxxi., "Trade Statistics."

Most of the carrying Import trade was in the hands of subsidized Spanish steamer-owners, whilst the larger portion of the Exports was conveyed in foreign vessels, which arrived in ballast from Eastern ports where they had left cargoes.

Smuggling was carried on to a considerable extent for years, and in 1891 a fresh stimulus was given to contraband by the introduction of a Protectionist Tariff, which came into force on April 1 of that year, and under which Spanish goods brought in Spanish ships were allowed to enter free of duty. [126]

In order to evade the payment of the Manila Port Works Tax (q.v.), for which no value was given, large quantities of piece-goods for Manila were shipped from Europe to Yloilo, passed through the Custom-house there and re-shipped in inter-island steamers to Manila. In 1890 some two-thirds of the Yloilo foreign imports were for re-shipment.

The circumstances which directly led to the opening of Zamboanga (in 1831) as a commercial port are interesting when it is remembered that Mindanao Island is still quasi-independent in the interior--inhabited by races unconquered by the Spaniards, and where agriculture by civilized settlers is as yet nascent. It appears that the Port of Jolo (Sulu Is.) had been, for a long time, frequented by foreign ships, whose owners or officers (chiefly British) unscrupulously supplied the Sulus with sundry manufactured goods, including _arms of warfare_, much to the detriment of Spanish interests there, in exchange for mother-of-pearl, pearls, gums, etc. The Spaniards claimed suzerain rights over the island, but were not strong enough to establish and protect a Custom-house, so they imposed the regulation that ships loading in Jolo should put in at Zamboanga for clearance to foreign ports. The foreigners who carried on this illicit traffic protested against a sailing-ship being required to go out of her homeward course about one hundred and twenty miles for the mere formality of customs clearance. A British ship (and perhaps many before her) sailed straight away from Jolo, in defiance of the Spaniards, and the matter was then brought to the notice of the British Government, who intimated that either Jolo must be declared a free port or a Custom-house must be established there. The former alternative was chosen by the Spaniards, but Zamboanga remained an open port for foreign trade which very rarely came.

The supreme control of merchant shipping and naval forces was vested in the same high official. No foreigner was permitted to own a vessel trading between Spain and her colonies, or between one Spanish colony and another, or doing a coasting trade within the Colony. This difficulty was however readily overcome, and reduced to a mere ineffective formality, by foreigners employing Spaniards to become nominal owners of their vessels. Thus a very large portion of the inter-island steamer carrying-trade was virtually conducted by foreigners, chiefly British.

Mail-steamers, subsidized by the Government, left the capital every fortnight for the different islands, and there was a quarterly Pacific Mail Service to the Ladrone Islands. [127] Regular mails arrived from, and left for, Europe every fortnight, but as there were intermediate opportunities of remitting and receiving correspondence, really about three mails were received and three despatched every month. The mail-route for Europe is _via_ Singapore, but there were some seven or eight sailings of steamers per month between Manila and Hong-Kong (the nearest foreign colony--640 miles), whence mails were forwarded to Europe, Australia, Japan, the United States, etc.

Between the capital and several ports in the adjacent provinces there was a daily service of passenger and light cargo-steamers.

Between Yloilo and the adjoining Province of Antique, the District of Concepcion and the Islands of Negros and Cebu, there were some half-dozen small steamers, belonging to Filipinos and Spaniards, running regularly with passengers and merchandise, whilst in the sugar-producing season--from January to May--they were fully freighted with cargoes of this staple article.

The carrying-trade in sailing craft between the Islands was chiefly in the hands of natives and half-castes. There were also a few Spanish sailing-ship owners, and in the Port of Yloilo a few schooners (called _lorchas_), loading from 40 to 100 tons of sugar, were the property of foreigners, under the nominal ownership of Spanish subjects, for the reasons mentioned in the preceding page.

The principal exporters employ middlemen for the collecting of produce, and usually require their guarantee for sales at credit to the provincial purchasers of imports. These middlemen are always persons of means, born in the Colony, and, understanding both the intricacies of the native character and the European mode of transacting business, they serve as very useful--almost indispensable--intermediaries.

It was only when the crisis in the Sugar trade affected the whole world, and began to be felt in the Philippines in 1884, that the majority of the natives engaged in that industry slowly began to understand that the current price of produce fluctuated according to supply and demand. Before transactions were so thoroughly in the hands of middlemen, small producers used to take their samples to the purchasers, "to see how much they cared to pay" as they expressed it--the term "market price" seldom being used or understood in the provinces, because of the belief that prices rose or fell according to the caprice or generosity of the foreign buyer. Accustomed to deal, during the first centuries of the Spanish occupation, with the Chinese, the natives, even among themselves, rarely have fixed prices in retail dealings, and nearly every quotation in small traffic is taken only as a fancy price, subject to considerable rebate before closing. The Chinese understand the native pretty well; they study his likings, and they so fix their prices that an enormous reduction can be made for his satisfaction. He goes away quite contented, whilst the Chinaman chuckles over having got the best of the bargain. Even the import houses, when they advertise their goods for sale, seldom state the prices; it seems as if all regarded the question of price as a shifty one.

The system of giving credit in the retail trade of Manila, and a few provincial towns, was the ruin of many shopkeepers. There were few retailers who had fixed prices; most of them fluctuated according to the race, or nationality, of the intending customer. The Chinese dealer made no secret about his price being merely nominal. If on the first offer the hesitating purchaser were about to move away, he would call after him and politely invite him to haggle over the bargain. [128]

The only real basis of wealth in the Colony is the raw material obtained by Agriculture, and Forest produce. Nothing was done by the conquerors to foster the Industrial Arts, and the Manufacturing Trades were of insignificant importance. Cigars were the only _manufactured_ export staple, whilst perfumes, a little cordage, and occasionally a parcel of straw or finely-split bamboo hats were shipped.

In the Provinces of Bulacan and Pampanga, split-cane and Nito (_lygodium_) hats, straw mats, and cigar-cases are made. Some of the finest worked cigar-cases require so much time for making that they cost up to P20 each. Hats can only be obtained in quantities by shippers through native middlemen.

In Yloilo Province a rough cloth called _Sinamay_ is woven [129] from selected hemp fibre. Also in this province and that of Antique (Panay Is.), _Pina_ muslin of pure pine-leaf fibre and _Husi_ of mixed pine-leaf and hemp filament are made. Ilocos Province has a reputation in these Islands for its woollen and dyed cotton fabrics. Taal (Batangas) also produces a special make of cotton stuffs. Pasig, on the river of that name, and Sulipan (Pampanga), are locally known for their rough pottery, and Capiz and Romblon for their sugar-bags.

Paete, at the extreme east of the Laguna de Bay, is the centre for white-wood furniture and wood-carving. In Mariquina, near Manila, wooden clogs and native leather shoes are made. Santa Cruz (Manila) is the gold and silver-workers' quarter. The native women in nearly all the civilized provinces produce some very handsome specimens of embroidery on European patterns. Mats to sleep upon (_petates_) straw bags (_bayones_), baskets (_tampipes_), alcohol, bamboo furniture, buffalo-hide leather, wax candles, soap, etc., have their centres of manufacture on a small scale. The first Philippine brewery was opened October 4, 1890, in San Miguel (Manila) by Don Enrique Barretto, to whom was granted a monopoly by the Spanish Government for twenty years. It is now chiefly owned by a Philippine half-caste, Don Pedro P. Rojas (resident in Paris), who formed it into a company which has become a very flourishing concern. Philippine capital alone supports these manufactures. The traffic and consumption being entirely local, the consequent increase of wealth to the Colony is the economized difference between them and imported articles. These industries bring no fresh capital to the Colony, by way of profits, but they contribute to check its egress by the returns of agriculture changing hands to the local manufacturer instead of to the foreign merchant.

Want of cheap means of land-transport has, so far, been the chief drawback to Philippine manufactures, which are of small importance in the total trade of the Colony.

Philippine railways were first officially projected in 1875, when a Royal Decree of that year, dated August 6, determined the legislative basis for works of that nature. The Inspector of Public Works was instructed to form a general plan of a railway system in Luzon Island. The projected system included (1) a line running north from Manila through the Provinces of Bulacan, Pampanga, and Pangasinan. (2) A line running south from Manila, along the Laguna de Bay shore and eastwards through Tayabas, Camarines, and Albay Provinces. (3) A branch from this line on the Laguna de Bay shore to run almost due south to Batangas. The lines to be constructed were classed under two heads, viz.:--(1) Those of general public utility to be laid down either by the State or by subsidized companies, the concession in this case being given by the Home Government; and (2) those of private interest, for the construction of which concessions could be granted by the Gov.-General.

In 1885 the Government solicited tenders for the laying of the first line of railway from Manila to Dagupan--a port on the Gulf of Lingayen, and the only practicable outlet for produce from the Province of Pangasinan and Tarlac District. The distance by sea is 216 miles--the railway line 196 kilometres (say 120 miles). The subsidy offered by the Government amounted to about P7,650 per mile, but on three occasions no tender was forthcoming either from Madrid or in Manila, where it was simultaneously solicited. Subsequently a modified offer was made of a guaranteed annual interest of 8 per cent, on a maximum outlay of P4,964,473.65, and the news was received in Manila in October, 1886, that the contract had been taken up by a London firm of contractors. The prospectus of "The Manila Railway Co., Ltd," was issued in February, 1888. The line was to be completed within four years from July 21, 1887, and at the end of ninety-nine years the railway and rolling-stock were to revert to the Spanish Government without compensation. The rails, locomotives (36 tons and 12 tons each), tenders, coaches, waggons, and ironwork for bridges all came from England. The first stone of the Central Station in Manila (Bilibid Road, Tondo) was laid by Gov.-General Emilio Terrero on July 31, 1887. In 1890 the original contractors failed, and only the first section of 28 miles was opened to traffic on March 24, 1891.

Many other circumstances, however, contributed to delay the opening of the whole line. Compensation claims were very slowly agreed to; the Government engineers slightly altered the plans; the company's engineers could not find a hard strata in the bed of the Calumpit River [130] (a branch of the Rio Grande de Pampanga) on which to build the piers of the bridge; and lastly the Spanish authorities, who had direct intervention in the work, found all sorts of excuses for postponing the opening of the line. When the Civil Director was applied to, he calmly replied that he was going to the baths, and would think about it. Finally, on appeal to the highest authority, Gov.-General Despujols himself went up to Tarlac, and in an energetic speech, reflecting on the dilatoriness of his subordinates, he declared the first Philippine railway open to traffic on November 23, 1892. For about a year and a half passengers and goods were ferried across the Calumpit River in pontoons. Large caissons had to be sunk in the river in which to build the piers for the iron bridge, which cost an enormous sum of money in excess of the estimate. Later on heavy rains caused a partial inundation of the line, the embankment of which yielded to the accumulated mass of water, and traffic to Dagupan was temporarily suspended. The total outlay on the line far exceeded the company's original calculation, and to avert a financial collapse fresh capital had to be raised by the issue of 6 per cent. Prior Lien Mortgage Bonds, ranking before the debenture stock. The following official quotations on the London Stock Exchange will show the public appreciation of the Manila Railway Company's shares and bonds:--

OFFICIAL QUOTATIONS.

December. | 7% Cum. Pref. L10 Shares. | | 6% Deb. L100 Stock. | | | 6% Prior Lien Mort. Bonds, | | | Series A., L100. | | | | 6% Prior Lien Mort. Bonds, | | | | Series B., L100.

L L L L 1893 2 49 98 87 1894 1 32 104 91 1895 1/2 29 107 85 1896 1/4 22 96 64 1897 1/4 19 101 75 1898 1 3/4 45 110 98 1899 1 3/4 33 1/2 101 1/2 87 1/2 1900 1 1/2 42 103 1/2 97 1901 2 55 108 102 1902 1 1/2 52 109 102 1903 1 1/2 58 108 104 1904 3 1/2 83 110 107 1905 4 3/4 117 110 106

Up to July 1, 1905, the interest has been regularly paid on the Prior Lien Bonds. No interest has been paid on the debentures (up to December, 1905) since July 1, 1891, nor on the 7 per cent. Cumulative Preference Shares since July 1, 1890. On January 26, 1895, these shares were officially quoted, for sellers, 0.

Including the termini in Manila (Tondo) and Dagupan, there are 29 stations and 16 bridges along the main line, over which the journey occupies eight hours. There are two branch lines, viz.:--from Bigaa to Cabanatuan (Nueva Ecija), and from Angeles (Pampanga) to Camp Stotsenberg. From the Manila terminus there is a short line (about a mile) running down to the quay in Binondo for goods traffic only. The country through which this line passes is flat, and has large natural resources, the development of which--without a railway--had not been feasible owing to the ranges of mountains--chiefly the Cordillera of Zambales--which run parallel to the coast.

The railway is ably managed, but when I travelled on it in 1904 much of the rolling-stock needed renewal.

In 1890, under Royal Order No. 508, dated June 11 of that year, a 99 years' concession was granted to a British commercial firm in Manila to lay a 21-mile line of railway, without subsidy, from Manila to Antipolo, to be called the "Centre of Luzon Railway." The work was to be commenced within one year and finished within two years. The basis of the anticipated traffic was the conveyance of pilgrims to the Shrine of Our Lady of Good Voyage and Peace (_vide_ p. 184); but, moreover, the proposed line connected the parishes of Dilao (then 4,380 pop.), Santa Ana (then 2,115 pop.), Mariquina (then 10,000 pop.), Cainta (then 2,300 pop.), and Taytay (then 6,500 pop.)--branching to Pasig and Angono--with Antipolo (then 3,800; now 2,800 pop.). The estimated outlay was about P1,000,000, but the concession was abandoned. The project has since been revived under American auspices.

Under Spanish government there was a land Telegraph Service from Manila to all civilized parts of Luzon Island--also in Panay Island from Capiz to Yloilo, and in Cebu Island from the city of Cebu across the Island and up the west coast as far north as Tuburan. There was a land-line from Manila to Bolinao (Zambales), from which point a submarine cable was laid in April, 1880, by the Eastern Extension Australasia and China Telegraph Company, Ltd., whereby Manila was placed in direct telegraphic communication with the rest of the world. For this service the Spanish Government paid the company P4,000 a month for a period of 10 years, which expired in June, 1890. In April, 1898, the same company detached the cable from Bolinao and carried it on to Manila in the s.s. _Sherard Osborn_, 207 nautical miles having been added to the cable for the purpose. In return for this service the Spanish Government gave the company certain exclusive rights and valuable concessions. In May, 1898, the American Admiral Dewey ordered the Manila-Hong-Kong cable to be cut, but the connection was made good again after the Preliminaries of Peace with Spain were signed (August 12, 1898). Cable communication was suspended, therefore, from May 2 until August 21 of that year.

In 1897 another submarine cable was laid by the above company, under contract with the Spanish Government, connecting Manila with the Southern Islands of Panay and Cebu (Tuburan). The Manila-Panay cable was also cut by order of Admiral Dewey (May 23, 1898), but after August 12, under an arrangement made between the American and Spanish Governments, it was re-opened on a neutral basis, and the company's own staff worked it direct with the Manila public, instead of through the medium of Spanish officials.

Since the American occupation a new cable connecting the Islands with the United States has been laid (opened July 4, 1903), whilst a network of submarine and land-wires has been established throughout the Archipelago.

Owing to their geographical position, none of the Philippine ports are on the line of the regular mail and passenger steamers _en route_ elsewhere; hence, unlike Hong-Kong, Singapore, and other Eastern ports, there is little profit to be derived from a cosmopolitan floating population. Due, probably, to the tedious Customs regulations--the obligation of every person to procure, and carry on his person, a document of identification--the requirement of a passport to enter the Islands, and complicated formalities to recover it on leaving--the absence of railroads and hotels in the interior and the difficulties of travelling--this Colony, during the Spanish _regime_, was apparently outside the region of tourists and "globe-trotters." Indeed the Philippine Archipelago formed an isolated settlement in the Far East which traders or pleasure-seekers rarely visited _en passant_ to explore and reveal to the world its natural wealth and beauty. It was a Colony comparatively so little known that, forty years ago, fairly educated people in England used to refer to it as "The Manillas," whilst up to the end of Spanish rule old residents, on visiting Singapore and Hong-Kong, were often highly amused by the extravagant notions which prevailed, even there, concerning the Philippines. But the regulations above referred to were an advantage to the respectable resident, for they had the desirable effect of excluding many of those nondescript wanderers and social outcasts who invade other colonies.

Since the Revolution there has been a large influx of American tourists to the Islands, arriving in the army-transports, passage free, to see "the new possession," as the Archipelago is popularly called in the United States.

##