In modern Philippine history a kind of watershed occurs around the middle of the eighteenth century.

The determinants of this demarcation are economic change and social change. In the late eighteenth
century the two systems of "native economy"and "Western economy" began to move closer together.
This was the period of the earliest Spanish attempts to encourage cash crops for export: sugar, indigo,
and tobacco in particular. Neither of the first two products proved very important during the eighteenth
century. But tobacco as a government monopoly was, along with customs receipts and indio tributes, a
major source of revenue for the Spanish government. The Western economy was changing in other
ways. Although some of the old dependence on the Manila Galleon system remained, even this system
was being modified, losing its entrepot character. More and more Philippine products were being
loaded for Mexico, cutting into the silks-for-silver exchange. Of more importance, Spain was beginning
to take the initiative in its economic relations with the Chinese. The foundation of the Royal Philippine
Company in 1785 began the era of sending Spanish ships to China for cargoes rather than awaiting the
arrival of the junk fleet. Another change was the opening of Manila in 1789 to non-Spanish European
vessels carrying Asian trade goods.” Prior to this time, Spanish colonial policy had prohibited the entry of
non-Spanish European vessels into the Philippines. This prohibition, and the Spanish reluctance to send
ships of their own to China, had meant that China-Philippines trade had been almost entirely dependent
upon the junk fleet from Amoy and Chiiian-chou in Fukien. During the cighteenth century the junk trade
to Manila had declined, as other parts of Southeast Asia (notably Netherlands India) became more
attractive to the Chinese. Now the competition of Spanish and other European vessels (especially
English), plying between Manila and China, reduced the junk trade still further. During the period
1797~1812 the average number of junks arriving annually at Manila was eight, as contrasted with
average annual arrivals of nineteen European vessels. This figure of eight stands in dramatic contrast to
the annual fleets Of twenty or thirty junks in the early seventeenth century. Spanish initiative in the
carrying trade brought Spain into the Canton trading system, somewhat belatedly, alongside the other
Europeans. Thus, while the junks continued to come from Amoy, Spanish vessels could trade only at
Canton. The total effect of this arrangement on the nature of Chinese immigration to the Philippines
cannot as yet be determined. But one new feature was the presence of a small body of Cantonese from
Macao, called in Manila macanistas (“macaos”), who were brought there by European vessels.°? To this
extent, at least, immigration was becoming more diversified geographically and less dependent upon
the junk trade. Within the Philippines, Spanish initiative took the form of attempts to replace the
Chinese in retail trade. The social background to these efforts was as follows. By the eighteenth century
the Manila Galleon trade, which had previously been open to most of the Spanish citizens of the city,
had become the monopoly of a small wholesale commercial guild, Those not included looked about for
other economic opportunities; so did the rising group of urbanized mestizos and indios. It was in the
interest of these groups that in 1755 the expulsion of most of the Chinese in the Philippines was ordered
and carried out. Most non-Catholic Chinese were expelled, both from the provincial areas and from
Manila, leaving pethaps 5,000 to 10,000 Chinese in the Philippines, almost all of them in manila. The
Spanish governor-general now attempted to organize a commercial company to handle retail trading.
The Spaniards and mestizos who participated raised 76,500 pesos. But the commercial company, a
victim of financial troubles, was a failure after only one year. Still, the Spaniards tried to keep the
Chinese out of retail trade for some years thereafter.” Meanwhile, Chinese refugees from the 1755
expulsion settled in the Sulu Archipelago or around the mouth of the Cotabato River in Mindanao, areas
as yet unconquered by the Spanish. In Mindanao they became rice millers, carpenters, and palm wine
distillers. They also exchanged Chinese goods, imported through Sulu, for rice and other Mindanao
products to be shipped to the Sulu and China markets. In all these activities, the Chinese were assisted
by high-interest loans made them by local Moro datus. In the Sulu area, Moro sea-trading was in decline
as the result of Spanish attacks on Moro vessels. The Chinese took over this trade. During the century
from 1750 to 1850 Spanish methods of controlling the Chinese underwent basic changes. The
segregation of non-Catholic Chinese from Catholic Chinese, indios, and Spaniards was abandoned. When
the Manila Parién was torn down in 1790 to make room for new fortifications for the walled city of
Manila, its inhabitants were permitted to scatter over most of the province of Tondo (which included,
roughly, parts of the present city of Manila, and the present Rizal province) and into Cavite. The result
was that most of them moved to Binondo and Santa Cruz, thus breaking down the old system of
separating Catholic and non-Catholic Chinese. The prin- ciple of separation on the basis of religion was
already largely discredited in Spanish thinking, a victim of the Spanish disillusionment of 1762-64.
Separation now was by “transient” or “resident.” Transient traders were housed in the Alcaicerfa de San
Fernando, a combined customs house, wholesale mart, and living compound, erected in Binondo in the
late 1750s. Strict legislation attempted to keep them separated from the resident Chinese, But in fact,
from the 1790s on- ward Binondo became a great Chinese and mestizo town in which permanently
residing Chinese, mestizos, and indios rubbed shoulders with new comers from China.” Outside the
Manila area there were fewer Chinese than ever. The expulsion of 1755 had left only a few Catholic
Chinese in some of the more important provincial towns.” And although, after 1790, it was again
possible for non-Catholics as well as Catholics to settle in the provinces—provided, in this case, that they
adhered strictly to agriculture—few Chinese took advantage of this opportunity. There were, here and
there, colonies of Chinese farmers or miners founded by enterprising Spaniards. But they were almost
all short-lived.” Few Chinese on their own initiative availed themselves of the opportunity to reside in
the provinces, and even those few were closely watched by local authorities. Nor were there any
independent farming and mining kongsi associations of Chinese, such as those used by the Chinese at
this time in the development of rural Malaya, South Siam, and West Borneo. Two reasons for their
absence might be (1) the continuity of mostly Hokkien (Fukienese) immigration, which had established
certain occupations as “Chinese,” and made gravitation to them the line of least resistance; and (2) the
Spanish unwillingness to allow the establishment of such autonomous “states within the state.” In the
century from 1750 to 1850 Spanish immigration policy moved from limitation to encouragement. After
1766 there were no more expulsions. A cautious figure of 4,000 “necessary” Chinese was set in 1790.
The actual Chinese population exceeded this, and possibly also the figure of 5,000 which appears in
official statistics of the period. But the size of the population seems to have been stable and was
probably much less than the normal Chinese population during the preceding two centuries. By the
1830s a Spanish desire to make more from the Philippine colony by developing it economically—in
agriculture, commerce, and industry—led to a gradual trend toward encouragement of Chinese
immigration. A much larger Spanish population, stronger military forces, and the absence of any Chinese
revolt since 1762 lent confidence to the Spaniards and overcame their former insecurity.Unquestionably
the most important social phenomenon of the century 1750-1850 was the rise of the Chinese mestizo to
a position of economic and social prominence. The development of the two communities of Catholic
Chinese at Binondo and Santa Cruz, and the pre-1750 scattering of Chinese in Luzon and parts of the
Bisayas had left a mestizo residue. By 1810 there were perhaps 120,000 mestizos in a total Philippine
population of about 2,500,000. Of more significance than their numerical strength (they formed, after
all, only 5 per cent of the total population) was the fact that the mestizos were concentrated in the most
westernized, most economically advanced parts of the Philippines. Over 60 per cent of the mestizos in
the Philippines resided in the three Central Luzon provinces of Tondo, Bulacan, and Pampanga. The
province of Tondo alone accounted for almost 30 per cent of the ‘mestizo population in the Philippines.
And although these were heavily populated provinces, the number of mestizos relative to the total
population was not insignificant. In Tondo, mestizos made up about 15 percent of the population; in
Bulacan and Pampanga they accounted for about 11 per cent each. In other, less populated provinces
within the same general region of Central Luzon, the mestizos, although not numerous in absolute
terms, were an important percentage of the provincial population, In Bataan 15 per cent of the
population was mestizo. Twelve per cent of Cavite’s population was mestizo. But away from Central
Luzon there were no large concentrations of mestizos. In other parts of Luzon there were mestizos—
some in almost every province; but in the Bisayas and Mindanao mestizos were few, both in absolute
terms and relative co the local population. Indeed, comething like 90 per cent of the mestizos in the
Philippines lived in Luzon, and in only a few spots in the other islands—notably the provinces of Cebu,
Hloilo, Samar, and Capiz—were mestizos of any significance. This pattern of mestizo geographical
distribution may be partly explained by reference to the pattern of Chinese settlement. The province of
Tondo in the early nineteenth century included the towns of Binondo and Santa Cruz. as well as the
present province of Rizal. We have already noted the importance of Binondo and Santa Cruz in Chinese
and mestizo affairs. Beyond them stretched the suburban towns to which Chinese could usually migrate,
however strict the government's policies. When residence restrictions were eased, the natural avenues
of expansion were those of the trade routes that linked Manila and the Manila Bay perimeter with the
Central Luzon plains. The pattern of Central Luzon settlement by the Chinese is therefore not surprising
and the pattern of mestizo distribution in this area may largely be explained as a consequence of
Chinese settlement patterns. However, one should note that since the mestizos were relatively free to
move about, their areas of residence were not entirely predetermined by where their paternal ancestors
had lived. Nevertheless, mestizos were found usually in those areas where Spanish settlement had
created economic opportunities, and in this they were like their Chinese ancestors. Thus, the largest
bodies of mestizos in the Bisayas were those around Cebu City and in two settlements in Iloilo province:
Molo and Jaro. All of these settlements were in areas of early Spanish colonization. Turning from the size
and distribution of the mestizo population about 1800 to its occupational characteristics, we find that
most of the mestizos of the Manila area were retail merchants or artisans. Away from Manila, the
characteristic mestizo occupations were wholesaling, retailing, and landholding. The reduction of the
Manila Chinese population by the expulsions of 1755 and 1766 meant less economic competition for the
mestizos who lived there. Although the Spaniards were never able to drive a siz- able wedge into the
Chinese dominance of Manila’s retail trade, the mestizos were. By 1800, mestizos and Chinese shared
the function of retailing imported goods and local products. In Manila mestizos were also found in many
trades hitherto exclusively Chinese: carriage-makers, carpenters, stone masons, printers, shoemakers,
and tailors. Presumably, some of their businesses were inherited from their Chinese fathers. But
apparently few if any mestizos inherited a position in the business of wholesaling the imports and
exports of the Chinese junk fleet. That was done through the Alcaiceria de San Fernando, exclusively by
the Chinese. Imports and exports in European vessels, whether from China or elsewhere, were handled
by the Spanish. Outside Manila, the 1755 and 1766 expulsions had drained the provinces of most of the
Chinese that had resided there. Accordingly, there were even fewer Chinese than in Manila to provide
economic competition for other social groups. Taking advantage of the situation, some mestizos and
indios now took over from the Chinese the job of provisioning Manila by collecting the produce of
nearby provinces and shipping i to the city. The mestizos and rich indios were also involved in the local
or native economy away from Manila in a way the Chinese probably had never been. Partly this was due
to the development of certain cash crops, which had to be collected and shipped to Manila for export.
These the mestizos and rich indios purchased wholesale and held for speculation on the Manila market.
Their major competitors in this trade were the Spanish governors of provinces, who acquired crops for
speculation by insisting that the indios of their provinces pay their tribute in kind rather than cash.”
Another reason for mestizo involvement in the native economy was the increasing complexity of the
local trade itself. This was especially true in the Bisayas, There the towns of Molo, Jaro, and Cebu
became not only the headquarters for the purchase of Bisayan export crops and local products going to
Manila, but the main distribution centers for intra-Bisayan trade as well. The manipulators of this
Bisayan trade were the mestizos of those towns. Another important area of mestizo interest, especially
in Central Luzon, was landholding. Spanish writers during the early decades of the nineteenth century
especially noted the landholding and land-use activities—and the wealth—of the mestizos of Central
Luzon. Ziifiiga, inparticular, repeatedly points out the role of the Central Luzon mestizos as lessees
(inguilinos) of rice-producing lands—lands that were often part of estates belonging to religious orders.
Some of the lands in question were sublet by the inquilinos for amounts in excess of the rent owed by
the inquilino to the landowner. Others were worked accord ing to the kasamahan system, by which the
actual tiller received apercentage of the crop, the inquilino taking the rest, from which he paid his rent.
Mestizos were also acquiring outright ownership of indio lands in Central Luzon. By providing loans for
the expenses of fiestas, baptisms, and litigation, with rice lands as security, the mestizos were in a
position to obtain the lands by foreclosure when the indio borrower defaulted, as was often the case. As
early as 1768 there were laws against such practices. But it was not easy to break the power of the
mestizo moneylender, who lived close to the indio and knew his needs. Thus, mestizos in Central Luzon
were much involved in questions of land tenure and usage. This is not the place for a detailed discussion
of the mestizo and land use. But it is worth pointing out in passing that students of the modern
Philippine land problem and the economic background to the Philippine Revolution would do well to
explore the activities of the Chinese mestizo.Besides the occupations mentioned, there were a few
mestizos, both in Manila and in the provinces, who were members of the professions, notably lawyers
and secular clergy. This is not to say that all members of these small professional classes were mestizos;
indios were also prominent. But for our purposes itis important ro note that there was in process of
development in this period a mestizo intellectual elite, hand in hand with an indio intelligentsia, though
both were still very small in size. In any locality where mestizos were sufficiently numerous, separate
mestizo gremios, or municipal corporations, were established alongside those of the indios, each
endowed with limited self-governing powers. There appear to have been only two places, Binondo and
Santa Cruz, where the presence of a large number of Chinese resulted in the existence of three gremios.
But there were many towns where a previous wave of Chinese immigration, now receded, had left
enough mestizos to set up a two-gremio (mestizo and indio) situation.
Economic and Social Changes (Mid-18th Century):

 A watershed moment in modern Philippine history around the mid-18th century.

 Economic and social determinants leading to change.

 A convergence of the "native economy" and "Western economy."

Spanish Attempt to Encourage Cash Crops (Late 18th Century):

 Spanish attempts to promote cash crops for export such as sugar, indigo, and tobacco.

 Tobacco became a major source of government revenue due to its government monopoly.

Changes in the Western Economy:

 Modification of the Manila Galleon system.

 More Philippine products being shipped to Mexico.

 Spain taking the initiative in economic relations with China.

 Foundation of the Royal Philippine Company in 1785 to send Spanish ships to China.

Opening of Manila to Non-Spanish European Vessels (1789):

 Previously prohibited, non-Spanish European vessels allowed in Manila.

 Reduced dependence on the junk fleet from China.

Expulsion of Chinese in 1755:

 In 1755, a significant expulsion of most non-Catholic Chinese in the Philippines.

 Spaniards attempted to organize a commercial company to replace the Chinese in retail trade.

Chinese Settlement in Sulu and Mindanao:

 Chinese refugees from the expulsion settled in the Sulu Archipelago and around the Cotabato
River in Mindanao.

 Engaged in rice milling, carpentry, and palm wine distillation.

Changes in Chinese Immigration and Residency:

 Spanish immigration policy evolved from limitation to encouragement.

 Abandonment of segregation between Catholic and non-Catholic Chinese.

 Transition from a system of separation based on religion to "transient" or "resident."

Rise of Chinese Mestizos (1750-1850):

 Chinese mestizos gained economic and social prominence.

 Concentration of mestizos in economically advanced areas, particularly in Central Luzon.

 Roles of mestizos in retail, trade, landholding, and the local economy.

Mestizo Geographic Distribution:

 Mestizos primarily concentrated in Luzon, particularly Central Luzon.

 Few mestizos in the Bisayas and Mindanao.

Mestizo Occupations:

 In Manila, mestizos engaged in retail, and trades previously dominated by Chinese.

 Outside Manila, mestizos involved in wholesaling, retailing, landholding, and provision of Manila
with regional products.

Formation of Mestizo Municipal Corporations:

 In areas with a significant mestizo population, separate mestizo gremios or municipal

corporations were established.

 Coexistence of mestizo and indio gremios with limited self-governing powers.

In any locality where mestizos were sufficiently numerous, separate

mestizo gremios, or municipal corporations, were established alongside

those of the indios, each endowed with limited self-governing powers.’6

There appear to have been only two places, Binondo and Santa Cruz,

where the presence of a large number of Chinese resulted in the exist-

ence of three gremios. But there were many towns where a previous