Introduction

By the first months of 1755, an ambitious plan for the development of the local economy was taking shape in the Philippines. The governor-general of the colony, Pedro Manuel de Arandía, on behalf of the Spanish king, Ferdinand VI, and under the auspices of the Virgin of the Rosary, endorsed the formation of a joint company in Manila. This new corporation aimed at obtaining the monopoly of the supply and retail in linen, wool, cotton, and silk for local consumption, thereby promoting local manufactures and export trade to Asian ports, while importing textiles into the archipelago. Moreover, Spaniards and natives alike were encouraged to acquire shares. However, and in spite of its divine and earthly endorsements, the Manila Company did not last long, as metropolitan authorities ultimately opposed the project, which at the same time faced several economic problems during its first year of existence. Yet this failed initiative represents a turning point in Philippine economic history, heralding the economic transformation that would take place in the islands during the second half of the eighteenth century. Furthermore, it also shows a colonial agenda usually disregarded in literature. Most authors refer to the transformation at the time as the “Bourbon reforms,” which were launched in the islands after the British invasion of Manila in 1762–64, during the Seven Years’ War. Metropolitan initiative imposed on reluctant Philippine economic actors would have set in motion a wide transformation of the archipelago, while reforms would have “opened” the colonial economy to regional and international trade. However, this 1755 project shows local traders’ initiative as a reaction to changes in the traditional commercial system, as well as their solid connections to the regional economy.

The Spanish crown had devised, since the end of the sixteenth century, a set of regulations that checked the highly lucrative transpacific trade, for it competed with metropolitan transatlantic trade in the colonial markets while pumping Latin American silver out of the Spanish empire. Thus, Philippine trade to Latin America was limited to one yearly round trip to Acapulco, New Spain, by the so-called “Manila galleon” (Galeón de Manila), while other transits in the Pacific were strictly forbidden— between Asia and Peru, and between the latter and New Spain.