Note 10 — V. The Nineteenth Century and Economic Development

It also failed to establish direct trade relations with China and India, but depended solely on buying the goods which were brought there by the Chinese and other foreign traders; hence, it had to pay higher prices for the Oriental goods it sent to Europe. The company, too, overestimated the importance of certain Philippine products, especially spices, which were produced much more cheaply in Sumatra and Java. Though allowed to invest only four per cent of its net profits in agriculture during the first years of its existence, it invested great sums in buying lands, made advances to the producers; in other words, it engaged in much speculation, which proved disastrous. It also gave premature attention to the development of manufacturing. The chief cause, however, of the failure of the company was the fact that it was not given control of the Manila-Acapulco trade, which continued to absorb the attention of the very men, who, because of experience in the country, would have helped the Company during its formative years.10