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When the Spaniards came to the Philippines, our ancestors were already trading with China, Japan, Siam, India, Cambodia, Borneo and the Moluccas. The Spanish government continued trade relations with these countries, and the Manila became the center of commerce in the East. The Spaniards closed the ports of Manila to all countries except Mexico. Thus, the Manila–Acapulco Trade, better known as the "Galleon Trade" was born. The Galleon Trade was a government monopoly. Only two galleons were used: One sailed from Acapulco to Manila with some 500,000 pesos worth of goods, spending 120 days at sea; the other sailed from Manila to Acapulco with some 250,000 pesos worth of goods spending 90 days at sea.
It also allowed modern, liberal ideas to enter the country, eventually inspiring the movement for independence from Spain. And because the Spaniards were so engrossed in making profits from the Galleon Trade, they hardly had any time to further exploit our natural resources.
Filipino farmers and traders finally had a taste of prosperity when Governor General Jose Basco y Vargas instituted reforms intended to free the economy from its dependence on Chinese and Mexican trade. Basco implemented a “general economic plan” aimed at making the Philippines self sufficient. He established the “Economic Society of Friends of the Country”, which gave incentives to farmers for planting cotton, spices, and sugarcane; encouraged miners to extract gold, silver, tin, and copper; and rewarded investors for scientific discoveries they made.
The tobacco industry was placed under government control during the administration of Governor General Basco. In 1781, a tobacco monopoly was implemented in the Cagayan Valley, Ilocos Norte, Ilocos Sur, La Union, Isabela, Abra, Nueva Ecija, and Marinduque. Each of these provinces planted nothing but tobacco and sold their harvest only to the government at a pre-designated price, leaving little for the farmers. No other province was allowed to plant tobacco. The government exported the tobacco to other countries and also part of it to the cigarette factories in Manila.
The tobacco monopoly successfully raised revenues for the colonial government and made Philippine tobacco famous all over Asia.