CHAPTER 10 :

PHILIPPINE ECONOMY UNDER SPAIN

The Filipinos, during the early period of Spanish regime, were living in scattered Barangays, either along water
routes or river banks and mountain ridges.

The first move taken by Spanish was to gather the Filipinos in one place. This task was assigned to missionaries
and encomenderos. The missionaries found out that establishing new pueblos was easier instead of them going
around chasing Filipinos.When they constructed churches they required Christian converts to construct their
houses around the church. Unbaptized Filipinos were also invited to do the same.

By establishing new settlements they made the Filipinos law abiding citizens of the spanish crown. The
unbelievers decide to go to the hills and were known as cimarrones or tulisanes.

Gradually, the Spanish introduced many changes in the country which affected the daily lives of the Filipinos,
most especially their economic life.

 THE ENCOMIENDA – refers to a grant from the Spanish crown to a Spaniards to exercise control
over a specific place, including it’s inhabitants.

3 kinds of encomienda in the Philippines

 Royal Encomienda – were lands reserved for the crown and here were principal towns, cities and ports.
 Ecclessiastical Encomiendas – were those given for the church.
 Private Encomiendas- granted to individual or private institutions.

Legazpi authorized the encomendero to collet tribute of eight reales yearly either in cash or in kind from all 19 to
60 years old Filipino males in private encomiendas.

The tribute was divided as follows: ¼ of the total collection went to the encomendero another portion to the
priest, and the remaining to the government.

 The Tribute – the paying tribute was started by Governor- General Miguel Lopez de Legazpi.

At the start each family was asked to pay eight reales. This was raised to 10 reales in 1602 and 15 reales in 1851.
The unmarried individual whose age is 20 was asked to pay half of tribute. Spaniards living in the Philippines, as
well as the cabezas de barangay, were exempted from paying taxes.

 Tobacco Monopoly – Governor- General Jose Basco Y Vargas introduced the tobacco monopoly to try
to improve the economic condition of the Philippines. It was March 1, 1782 when the tobacco
monopoly was established. Places planted Marinduque, Nueva Ecija, and provinces of Cagayan Valley
and Ilocos. Their sufferings lasted for a century and ended only 1882. It also made the philipppines the
biggest producer of tobacco in the world and as a result, it was able to meet some of the financial needs
of the colony. Aside from tobacco, the Spanish authories also established monopolies on wine,
explosives, abaca.
 Bandala System – the Spanish officials, their desire to increase the government income, introduced the
bandala system. In the bandala system, the Filipinos were given the quota for the products they produce.
 The Manila- Acapulco Galleon Trade(1565-1815)- lasted for 250 years with 2 vessels- one outgoing
and one incoming. The route was from Manila to Acapulco. The goods brought to America were
spices,gold and other products of Asian neighbors. Because the lucrarive trade. The Chinese converged
at the Parin or Alcaiceria of Manila in Binondo as early as 1637. Binondo became the business center of
the chinese.
 Obras Pias – were funds intended for social works but because of the clergy’s desire to earn more they
lent the money to businessmen with big interest most especially those involve in the Galleon Trade.
 Royal Economic Society of the Country – formed on May 6, 1781 and the President was Ciriaco
Gonzales Carvajal. It was organized by Governor Jose de Basco y Vargas. The society was also
credited in the formation of silversmith and gold heaters guild in 1783 and the construction of the first
paper mill in the Philippines in 1825. The society ceased to exist by the middle of 1890.
 Polo Y Servicio Personal- was patterned after the Mexican repartimiento or selection for forced labor.
Filipinos or Chinese whose age was from 16 to 60 years old were obliged to give personal service to
community projects like construction or cutting logs in the forests for forty days.
 Real Compania De Filipinas- was organized on march 10,1785 with 25 year charter. Objective was to
consolidate commerce and business between Asia and the Americas. They expected that the profit from
business will be used to support industries and agricultural projects in the Philippines.They carry Royal
flag of the Navy when they travel. In 1794-95 they gained 10 million pesos out of the initial capital
stock of eight million pesos and in the following year more than 15 million pesos.40 percents use for
research technical assistance and community development in the Philippines.1834 the company was
dissolved because of inefficient administration and conflict between the company and the local and
foreign traders.
 Trade and Industries- The Spaniards tried to improve the economic conditions of the Philippines by
introducing some agricultural plants such as coffee,cabbage, cacao, corn and others.Some industries
introduced candlemaking: wine production, soap making, resin and others. Philippines was opened to
world trade in 1834.
 Transportation and communication- It was 19th century that transportation and communications in
the Philippines began to developed.Many roads and bridges constructed. The only railroad company
known was Ferrocaril de Manila and the travel route available then was from Manila to Dagupan,
Pangasinan.1885, Jacobo Zobel De los Tranvias de Filipinas. 1892 there were five streets cars servicing
lines . Esteban Rana introduced the animal pulled tramcar in the Visayas that run between
Talisay(Negros Occidental) and Dos Hermosa from 1895-1896.drawn vehicles in manila were quills,de
luxe carriages of various size and shapes, with 2 horses and the calesa and carretela.First suspension
bribdge built in the Far East was known as Puente Colgante (near the present Quezon Bridge).Designed
by Gustave Eiffel and measured 110 meters long and seven meters wide.The bridge of spain known as
Jones Bridge was constructed to link Binondo with Intramuros,the Walled City.In 1889 first bicyle
appeared in the streets of manila.1890, telephone services started to be used in Manila,with initial
clients numbering about 170. In 1839, mail service between manila and Cavite started but the postage
stamps were used fifteen years later.1897 first inter –island submarine cable linking Manila to ILOilo,
Bacolod and Cebu by Eastern Extension Australia and China Telegraphy Company. 1814 public
lighting system was introduced in Mainla and its suburbs initially using coconut oil and later the
kerosene in the 1880’s. kinge,a French gas lamp,was banned in nipa houses to prevent fire.The walled
city and suburbs started to use electricity in 1893 when the La Electrista de manila was formed.83
rooms was accommodate them this hotel is Hotel de Oriente was famous among travellers. The best
hotel was Fonda de Lala(Fonda Francesca0 which was owned by Lala Ari.
 Banking System- bank established 1841 there was already Obras Pias which was not a bank but lent
money to those who participated in the galleon trade. First bank in the philippiens was organized by
Francisco Rodriguez in 1830. In 1851 Espanyol Filipino known today as Bank of the Philippien Islands
was established. It issued the first paper money in 1852. In 1873 the Chartered Bank of China was
founded and in 1876 the Hongkong and Shanghai Banking Corporation was organized in 1882 founded
Monte de Piedad which is still existing today.