ECONOMIC POLICIES UNDER THE SPANISH COLONIAL GOVERNMENT

~THE GALLEON TRADE~
By the end of the 16th century, Philippine trade relations with other countriessuffered a setback. Spain closedour country to wolrd trade, brought about by the practice of mercantilism. We became preoccupied with the Manila-Acapulco trade, popularly known as the "Galleon trade." it was named after the trading ship that sailed from Acapulco Manila, and vice versa. This trading lasted for 200 years. It became a government monopoly, owned and run by the Spanish government. The galleon left Manila with a rich cargo of Chinese silk and porcelain; Philippine cloth, hemp, cigars, and wood carvings, and other oriental goods brought to Manila from Asian countries such as chinaware, perfumes, rugs, sandalwood, ivory, and spices. These goods were shipped to Acapulco, Mexico where they had a good market. The galleon trade then returned from Acapulco with a rich treasure of Mexican silver pesos, wines, wool, sardines, official documents, the royal subsidy, and new officials for the colony. It was a very profitable business for the Spanish merchants and corrupt government ofiicials who ran it. it ended in 1815 when Mexico revolted against Spain. In those days, anyone could engage in the galleon trade when he possessed a boleta, which was a ticket entitling a holder to ship his mercahandise to Mexico aboard the galleon. Each boleta cost 250 pesos. Those who joined the galleon trade were the governor general, members of the royal audiencia, widows of spanish officials, retired government officials, and the rich businessmen who were also given the opportunity to join. Some did not have enough money or capital, and sold their boletas at a higher price to these rich merchants, even it was against the law. It brought about unfavorable effects to the Philippine economy. The developement of our natural resources and industries was neglected because our government officials had their attention on the galleon. Some Filipinos came down from the provinces to conduct trade in Manila, while others served as estevedores- porters in the ports where the ship arrived. Along with the goods that arrived in the country also came new ideas. It fostered cultural exchanges between Spain and Mexico, and increased government revenues that helped sustain the administration of the colony.
> I'm not sure if some people are still doing this, but if there are, I'm sorry but I don't know. :(
~THE ROYAL SUBSIDY~
The Spanish colonial government found itself short of funds (even they were not really short) to support the expenses of the government. So they will write a letter for the king of Spain that they were short of funds. The King immediately sent the financial aid to Manila every year through the Mexican viceroy, because the Spain ruled us from Mexico until thev19th century. The average amount of royal subsidy , called the real situado, sent by the Mexican viceroy to the Philippines was 250,000 pesos. But it ended in 1821 after the Mexican revolution, when Mexico won its freedom from Spain.
> As it was said above, the royal subsidy ended we our not having this. But sometimes, when Philippines really needs help, some countries gives as a support that is like a royal subsidy.
~ OBRAS PIAS AND THE RISE OF BANKS~
The first financial groups in Manila were the Obras Pias. These were the funds donated by rich individuals in society to the various religious orders. The obras pias served as banks which were run by the Spanish missionaries. They loaned money to bussinessmen who wanted to engage in galleon trade, and charged interests ranging from 20% to 50%. When they loaned money you should give a colateral that if you did not pay your propertyis now the property of the government. The first Filipino bank was founded in Manila by Francisco Rodriguez in the year 1830. This bank, called the "Rodriguez bank" in honor of its founder, no longer exists today. The oldest existing bank in the Philippines is the Bank of the Philippine Islands. It started on August 1, 1851 originally as the Banco Espanol-Filipino.
> So this policy still exists today because until now we still have banks. :)
~TRIBUTES~
Filipinos were required to pay attributes or taxes, as a recognition of Spanish authority and to finance the expenses of the colonial government. Tributes were paid either in cash or in kind, like tobacco, rice, or vegetables. In 1570,each family paid 8 reales which was equivalent to 1 peso, while a single person paid only one-half peso. Later, this was increased to 15 reales. The total tax collector was appropriated for the construction of bridges, roads, public buildings, the improvement of transportation and communication, and other public works.A portion of this also went to the church. In 1884, the tribute was replaced by the poll tax or cedula, which was equivalent to the residence tax today. All Filipinos aged 18 years old and above were required to pay this tax. In exchange, they were given a residence certificate.
> Example: Until now we are paying taxes even if we buy foods in the stores.
~ BANDALA SYSTEM~
Under this system, the Filipinos wre required or forced to sell their agricultural products to the government. In return, they will recieve a promissory note that promises and says that they will pay you at this particular date and they will not pay you at all. The worst it they will sell it in a higher price and then you need it so you will buy it. All I can say is that the government in that time was really evil.They don't have pity to the Filipinos. The Filipios also works for them and nothing return to them.Oh my!!!!!!
> Some says that an example of this was also paying taxes because we are paying it forcedly.
~ FORCED LABOR~
Polo means forced labor. A person who performed this was called polista. All Filipino male 16 years old to 60 were required to do this for 40 days in a year. In 1884, this was reduced to 15 days. The polistas rendered free labor by erving soldiers or sailors in Spanish military expeditions; by building roads, bridges, churches, and cutting timbers in forests, which they later used in building galleon ships. Filipinos at that time also became good ship builders. However, certain Filipinos were exempted from performing polo. These were the members of the principalia or aristocracy, composed of local officials, the teachers, and rich individuals. In exchange for their exemption, they had to pay falla, a sum of money amounting to one and a half reales. It was equivalent to a day of forced labor. This practice had a negative impact on the Filipinos. Agricultural production was adversely affected because the men who worked on the fields were busy doing public works. They were forced to leave their families behind while they worked in far away places. Lastly, the workers were not paid just wages for their services. So about this, polistas were working for nothing!!
>Muro A'mi is an example of the forced labor. The children that performs this were forced to dive into the ocean to get pearls or corals. This children were the abandoned children.
~ TOBACCO MONOPOLY~
On March 1, 1782, the tobacco monopoly was established by governor general Jose Basco. Its aim is to increase government revenue because the annual subsidy received from Mexico was no longer sufficient to maintain the colony. As such, an order was isssued for the widespread cultivation of tobacco in the provinces of Nueva Ecija, Cagayan Valley, Ilocos and Marinduque. The government set the required number of tobacco plants that must be sold to them by each family, including the selling price. No one was allowed to keep even a few leaves for his personal use. Thus, the Filipinos were forced to buy their tobacco from the government. Those who disobeyed this regulation were fined. The tobacco monpoly succeeded in its goal of increasing government revenue. It also developed the Philippine tobacco industr. We became known in other countries as producer of quality tobacco products. On the other hand, this also resulted in food shortages because the planting of essential crops like rice was neglected. The people were prohibited by he government from raising crops other than tobacco. The system was finally abolished by Governeo General Primo de Rivera.
> This monopoly was abolished but Filipinos were still planting tobacco even it is dangerous for your health and the one who inhales this smoke.
~ THE ENCOMIENDA~
Taken from the Spanish word encomendar which means to entrust, the encomienda was a priviledge to had a right to control a certain territory including its recidence. There were two kinds of encomiendas: (a) Private encomiendas were those belonged to the King's officials and other Spaniards who contributed to the colonization of the Phlippines. (b) Royal encomiendas were those who belonged to the King of Spain, such as the Bagumbayan, which is now known as the Luneta. The encomienda system was eventually abolished at the turn 19th century due to complaints of abuses from the people.
~OPENING OF THE PHILIPPINES TO WORLD TRADE AND FOREIGN INVESTMENT~
In the beginning, the Spaniards closed the country to the outside world for fear of foreign enemies or spies. However, this policy only worsened the economy, so on September 6, 1834, a royal decree was issued wherein Spain officialy opened the Philippines to world trade. This meant that goods from the Philippines may now be shipped abroad, in the same way that goods from foreign countries may also enter the Philippines directly. This new policy improved the Philippine economy. Accordingly, ports in various parts of the country were opened to foreign ships. As a result of this opening to world trade, foreign investment poured into the country. In the past, Spanish law banned foreigners, except the Chinese settlers, from living in the provinces or engaging in business in the Philippines. The Spaniards believe that money earned by a foreigner was a profit taken from thepocket of a spaniard.But with the trade liberalization, foreign businessmen were now allowed to do business in Manila and other places in the country. The first foreign merchant to establish a business and live in the Visayas region was Nicholas Loney of England. He arrived in Iloilo in 1855 and within a short time, became rich businessman. He helped develop the Philippine sugar industry.
~IMPROVEMENT IN AGRICULTURE~
The participation of hte Philippines in world trade resulted in increased agricultural production. The Philippines exported hemp, tobacco, sugar, and copra, among others. There were certain provinces that concentrated in the production of these products. Batangas became known for its coffee, Isabela for its tobacco, Laguna and Tayabas for their coconuts, bicol for itsabaca plantations and Negros for its sugar haciendas. The quantity and quality of our crops improved tremendously during the period. In addition, new methods in agriculture and new farming equipment were introduced.
~IMPROVEMENT IN THE STANDARD LIVING~
The trade between the Philippines and other countries resulted in an increased income, as well as a general improvement in their standard of living. Some peoplo can now afford to build stone houses with windows made of capiz shells and beautiful gardens. Others were able to buy imported goods like canned foods, shoes, hats, jewelries, pianos, and nice clothes. People began to decorate their houses with beautiful furniture, rugs,paintings and statues, typical of a western lifestyle. For travelling, they used housedrawn carriages, steamships, trains, and tranvias. With regard to dining, they learned to eat with spoons, forks, table knives, napkins, and crystal drinking glasses.
~TRANSPORTATION AND COMMUNICATION~
With the opening of Manila to world trade in 1834, the construction of roads and bridges became necessary to facilitatethe transportation of goods in the country. In 1846, the first farola or lighthouse was built at the mouth of Pasig river to guide ships at the sea. The first railroad in the Philippines was built in 1892 by a british company. It was called the Manila-Dagupan railway. The first street car called tranvia, which was pulled by horses began operations in Manila in 1893. The electrification in Manila then followed in 1895. In the field of communication, the first monthly mail service between Manila nad Hongkong started in February 1854; the first telegraph system in 1873;while the first cable connecting the Philippines to other countries was installed in 1880. Finally, the first telephone was installed in Manila in the year 1890.