Study Notes on the Changing Landscape of Philippine Economy and Society

Considered an era of profound change: economic, political, social, and cultural currents.
Changes had initial ripples in the late 18th century.
- Dynastic shift from Habsburgs to Bourbons in Spain.
- New leadership recalibrated colonial policies affecting the Philippines.
Bourbon reforms aimed to reinvigorate colonial profitability in the Philippines.
- First Bourbon governor-general: José de Basco y Vargas (arrived in 1778).

By the time Basco arrived, the Galleon Trade was declining.
- Spain sought to salvage the empire's economy amid industrialization.
- Global industrialization increased demand for raw materials.
- Focus shifted towards agricultural potential of the Philippines.
- Transformation of the economy towards export-oriented agriculture.

Basco established the Royal Philippine Company in 1785.
- Purpose: Finance agricultural projects and manage new trade.
- Trade relations extended to Spain, Europe, and Asian markets.
- Changes faced resistance from various sectors:
- Catholic Church opposed labor realignments.
- Traders favored the old Galleon Trade.
- Company faced issues: mismanagement and corruption.
Reforms instituted by Basco:
- Lifted ban on Chinese merchants to reinvigorate internal trade.
- Supported development of cash crop farms.
- Relaxed policies for the gradual opening of Manila to foreign markets.
- Established the Tobacco Monopoly to maximize exports.

Early 19th century events:
- 1810 Mexican War of Independence shook Spanish Empire.
- End of Galleon Trade raised economic concerns in the Philippines.
Recalibration of policies led to the closing of the Royal Philippine Company; Manila opened to world trade in 1834.
- Influx of foreign merchants (British and American) financing agriculture.
Rise of cash crops: by the first half of the 19th century, major exports included tobacco, sugar, cotton, indigo, abaca, and coffee.

Increased focus on land ownership as cash crops became main revenue source.
Farmers under pressure as hacenderos exploited land:
- Pacto de retroventa: a compelled sale agreement for small landowners to regain ownership.
- Difficulties in repurchasing land due to economic pressures led many farmers into debt.
- Land acquisition through land-grabbing and emergence of tenant farmers (kasamá).
Inquilinos: rented land to sublet to smaller farmers.
Resulting social stratification changes fostered tensions in rural areas.

Beneficiaries of the changing economy:
- Chinese had longstanding trading relations with Filipinos since pre-colonial times.
- During Galleon Trade, Chinese products dominated trade flows; their settlements raised suspicion among Spaniards.
- Stringent policies against Chinese included taxes, restricted movement (Chinese enclave - Parian), and potential expulsion.
Despite suspicions, Chinese played a crucial role as "necessary outsiders" in the economy, pivotal in:
- Goods transport and retail trade development.
- Intermarriages led to the emergence of Chinese mestizos who later accumulated wealth and influence.

Economic shifts necessitated a more literate population:
- Demand for professionals in trading posts and centers like Manila.
1836 colonial government order established primary schools for literacy.
- Education decree of 1863 mandated free primary education.
- Schools like Ateneo Municipal were founded during this era, supporting the education of future professionals.
Increased bureaucratization due to a complex developing economy.

Manila became a destination for those seeking better opportunities:
- Resulting in overcrowding, sanitation issues, increased criminality, and challenges for tax collection.
- 1849: Governor-General Narciso Claveria urged surname adoption for better governance and surveillance.
Government measures included:
- Catalogo de apellidos (surname registry).
- Issuing cedulas for resident identification.
- Establishing guardia civil for enforcement of regulations.

Economic developments prompted a redefinition of social relations:
- Emergence of new social strata:
- Peninsular: Spaniards born in Spain.
- Insular: Spaniards born in the Philippines.
- Mestizo: Mixed parentage (Spanish or Chinese with a native).
- Principalia: Wealthy natives descending from the kadatoon class.
- Indio: Pure-blooded natives of the Philippines.
- Chino infiel: Non-Catholic Chinese.
As Spaniards lost economic power, they relied on racial dominance, complicating relationships with rising mestizo and principalia populations.
Wealthy mestizos and principalia sought social recognition and avenues of education, influencing Filipino nationalism.

Pre-colonial trade with China and other Asian countries defined early Filipino economy.
Merchantilism restricted trade with all but China and Mexico, maintaining Galleon Trade for over two centuries:
- Galleon Trade had strong regulations limiting foreign merchant interactions.
- Exports largely consisted of goods from Chinese and other Oriental merchants.
Impact of the Galleon Trade:
- Stifled growth and development of the Philippine economy.
- Spaniards monopolized trade and controlled the retail business.
- Chinese became vital in the money-lending sector between foreign merchants and Filipinos, especially peasants.
- Clergy as investors in the Galleon Trade via Obras Pias charities led to eventual bankruptcy concerns.

Abolition of Galleon Trade in 1815 prompted more open trade relations globally.
Spanish government allowed foreign investment in the Philippines:
- Opened ports in Manila and other regions.
- Foreign banking institutions established lending facilities.
Introduction of scientific farming methods accelerated agricultural production.
Improved infrastructure (roads, bridges, shipping lines) and communication systems.
Economic changes enhanced the quality of life in the Philippines.

Influx of liberal ideas from the West after the opening of the Suez Canal in 1869 spurred Philippine nationalism:
- Influences from thinkers like Plato, Aristotle, Kant, Rousseau, Locke, Voltaire, and Jefferson introduced new concepts of politics, justice, equality, freedom, and human rights.
Filipinos began to address their grievances and demanded overdue government reforms.

The interplay of economic developments, educational reforms, and liberal ideas significantly shaped the expansion of nationalism in the 19th century Philippines, producing a new social order and prompting eventual calls for reform and independence.