Note 1 — IV. Trade and Commerce: the Period of Restrictions

Before giving the various decrees passed from time to time to regulate this commerce, it is advisable to discuss the arguments advanced by the two sides. The Spanish merchants contended that the competition of goods coming from the East would destroy the manufactures on the Peninsula; and, further, that the sending of silver to the Orient, would drain the supply available for Spain, and, therefore, in accordance with the mercantilist doctrine, should be prevented. Manila answered by saying that the goods that she exported to New Spain were different from those coming from Spain; therefore, there was really no competition between them. In other words, the demand for either kind of goods was separate from, and independent of, the demand for the other.1 Other arguments were advanced to prove that Manila should be treated with consideration; the driving out of the Dutch from the Moluccas by the Philippine government,2 the preservation of the missionary conquests in the Far East,3 and the maintenance of the prestige of the Spanish crown,4 all of these would result from the maintenance of the Philippines, by making it possible for her to support herself with the galleon trade. These, added to the fact that the trade with New Spain was not so profitable as commonly reported5 on account of the many perils involved in it, entitled Manila to a more liberal treatment.