The economic situation in the Philippines did not greatly improve under Spanish rule. While some social and cultural changes were made, the economic benefits mainly went to Spanish colonizers rather than Filipinos. New systems like land ownership, tribute payments, and forced labor were introduced but oppressed Filipinos and slowed economic development. This exploitation of resources and people by Spain and the rich landowners contributed to the Philippine revolution for independence.

1. Chapter 10
Prepared by:
Maryjane C. Cantiga
BSEd-4B

2. Even though our social and cultural life improved under Spain , our economic life
did not improve very much. while we were colony of Spain, the Filipinos benefited only a
little from economic change made by spain. It was the spaniards who benefited more than
Filipino. This slow development in the wealth of our country was one of the reasons of the
Philippine revolution.
The economic wealth of the Filipinos did not really improve a lot under Spain.
This due progress was due to:
1. Lack of interest of Spain of practical matters,
2. Spain was more interested in the Catholic religion,
3. In dreaming of an empire in Asia.
The Spaniards did not go deep into the mountains and the forests in short,
Spaniards did not really know how to make money grow.
Slow Development under Spain

3. Economic changes Made by Spain
1. New way of land owner ship;
2. Encomienda system;
3. Tribute;
4. Polo of force labor;
5. Abolition of slavery;
6. Galleon trade and annual subsidy from
Mexico;
7. Introduction of new plants and
animals;
8. Introduction of new Industries;
9. Economic society and Royal Company;
10. Scientific survey;
11. Opening of the Philippines to world trade
and foreign investments;.
12. Rise and banks;
13. Improvement in transport and
communication;
14. New social classes;
15. Prizes and International exhibitions.
These are the economics changes made by Spain;

4. New Way of Land Ownership
Spain introduced the idea that a person and his Family own land. Before, the entire
barangay owned the land in common under the datu’s leadership. But after the Spaniards came,
the land was divided among the rich hacienderos (farm owner), the religious orders, and others.
Rich landowner could now pass on their land to their heirs.
Encomienda
An encomienda was the money from the tribute upon a certain conquered territory. It
was given by the king to a Spanish conquistador (colonizer) as a reward for his services. The
encomiendas (owner of the encomienda) could keep the tribute money for himself instead of
giving it to the government.
In 1591 there were 267 encomiendas in the Philippine. But due to abuses, the system
abolished in the 16th century. Afterwards, all the tribute money went to the Spanish government.

5. Tribute
The tribute was the residence tax during Spanish times. Each family paid one peso
per year. A single person paid one-peso half. The tribute was replaced in 1884 by the CEDULA
TAX. Filipino were very unhappy with these taxes because the Spanish officials cheated and
oppressed them.
Today, Filipinos of 18 years above still pay the cedula in their local town or city. In
exchange, they are given a “residence certificate”.
Polo or Forced Labor
All male Filipinos from 16 – 60 yrs old were forced to work for the government for
40 days. This forced called POLO. But in 1884, it was reduced to 15 days. The Politas (forced
labor) worked for various public works, like building, roads and bridges, and etc.
A polista could get out of work by paying a sum of money or hiring somebody else
to do his polo.

6. Abolition of Slavery
 One of the good thing Spaniards did for the Filipinos.
 A Filipino could own slaves like they owned property.
 In 16th century, the Spanish missionaries protested to the king about keeping of slaves in the
Philippines. A royal decree was made in 1589 to abolish the abolition of the slave in our country.
 This ahead of other countries in giving freedom to slaves. The United states did not ban slavery
until 1862.
 Britain ended slavery in the British empire in 1833 .
Galleon Trade and Subsidy from Mexico
 For two and half centuries, the Philippines carried on the galleon trade with Mexico and
received a subsidy from the Mexican victory.
 The Galleon trade was named after the sailing ship which sailed once a year from Manila to
Acapulco, Mexico and back. The galleon left Manila with a rich cargo of Chinese silk and wood
carvings. It returned from Acapulco with a rich measure of Mexican silver pesos, wines,
sardines, official documents, the royal subsidy and new officials for colony.

7.  It ended in 1815 when Mexico revolted against Spanish.
 Royal Subsidy (real situado) – The Spanish government could not afford to pay for expenses
(salaries & public works). The average amount was 250,000. But it ended in 1810 after the
Mexican Revolution.
Introduction of New Plants and Animals
Spanish colonizers introduced new plants and animals in the Philippines.
 New plants include corn, coffee, cacao, beans, achuete, maguey, peanuts, chico and papaya.
 New Animals were sheep, cattle, goats, horse, pigeons, swan, carabao, ducks, geese, and
better breeds of chicken and rooster.
Introduction of New Industries
The Spanish taught the Filipinos better methods of farming, cattle-ranching, the
making of candles and soap, the construction of stone houses, the building of roads, bridges
and dam, and the weaving of hats and mats. The Filipinos began to grow large amounts on
sugar, hemp, coconut, and tabacco. Later, these industries became the pillars of the Philippine
economy.

8. Economic Society and the Royal Company
1. The Economic Society of Friends of the country
- It was founded in 1781 by Governor General Basco. He was the Spanish governor
general who helped develop Philippine agri-cultural the most. The Economic Society
sent the first shipment of Indigo (dye) to Europe. It bought special birds from China to
fight the locusts that destroyed crop. And it imported new seeds and machinery from
United States to help farmers. The Economic Society stopped operating in 1809.
2. The Royal Company of the Philippines
- In 1785, King Charles III founded the Royal Company of the Philippines. This was
another business firm to take advantage of the trade trade and shipping industries. It
was owned by the king, foreign banks, and private citizens in Spain, Mexico, Cuba, the
Philippines, and other Spanish colonies. But it was badly managed, and it closed down
in 1834.
Two economic organizations:

9. Scientific Survey
The first Scientific Survey of the Philippines was done by the Spaniards under the
command of Captain Alejandro Malaspina in 1789. A botanist named Antonio Pineda went with
the expedition. He made a study of the Philippines plants. From this expedition came the first
modern shipping chart and map of the Philippines.
Opening doors to World Trade and foreign Investment
In 1834, Spain opened the Philippines to world trade. This meant that the goods
from the Philippines could be shipped to any country abroad. And the other goods could be
enter the Philippines directly. The new policy improved the Philippine economy.
In the early 19th century, foreign businessmen were allowed to do business in Manila
and other places in the country. American and European opened new business in the
Philippines. By 1859, there were 15 foreign companies in the Manila – seven British, three
American, two French, two Swiss, and one German.

10. The first merchant to live in the Visayas was Nicolas Loney of Plymouth England in
Iloilo in 1855. he became a rich businessman in just a short time. He developed the Philippine
sugar industry.
The rise of the banks
The first bank was started in the Philippines by the Spaniards. Several religious orders
and rich Spaniards gave loans for businessmen. The interest was used for charitable works. This
was called the Obras Pias (Good works) system.
The first Filipino bank was founded at Manila in 1830 by Francisco Rodriguez. He
was a Filipino Quarker (Protestant) who lived in England. This bank was no longer exist.
The oldest existing bank in the Philippines is the Bank of the Philippine Islands. It
started at the Banco Espanol-Filipino. In 1862 the Monte de Piedad Savings Bank was also
founded by the Spaniards.

11. Improvement of Transportation and Communications
In the 19th century transportation and communications improved greatly in Spanish
Philippine. Spain built many roads and bridges, lighthouse for ships, the first city tramcar
(tramvia) and the first electric light system. The British built the first railroad in 1891. it ran from
Manila to Dagupan.
The first postage stamp was issued on February 1, 1854. The monthly mail started from
manila to Hong Kong in 1854. the first steamships came in 1848. the first telegraph started in
1783. The first telephone came in 1890.
Social Classes
Three social classes during Spanish era:
1. The upper class
- Composed of the richest and most powerful people in the society. They were also
called Principalia or illustrados. They were the former datus and maharlikas
(Noble), the biggest landowners or hacienderos (owners of large haciendas), the
leading professionals like doctors, lawyers, engineers and teachers. From this class
came the local officials like the gobernadorcillo nad cabeza de barangay.

12. 2. The middle class
- They were newly rich people who owned lands and business o worked as professionals,
but were not rich as the upper class. The richest of the middle class could also become
illustrados professionlas, and landowners. The middle class only arose during the 19th
century when the Philippine economy boomed. Out of the middle class came Rizal,
Aguinaldo, and the Luna brothers.
3. The lower class
- The rich people who owned farm called hacienderos or sometimes caciques. However,
the word “caciques” gas a bad meaning in the Philippines, because it was used to
describe a selfish rich person who does not help the poor. Unfortunately, some caciques
became proud and abusive. They imitated the aristocratic airs of the Spaniards and
maltreated their farmers or servant. They gave lavish parties for Spanish officials and
snubbed their fellow countrymen. These arrogant rich caciques were hated by the poor
people.
- This includes the workers and tenants farmers. They were the servants of the other
classes, the factory workers, or the masses in the countryside. Out of this classes
came heroes like Bonifacio (“The Great Plebeian”), Emilio Jacinto, and Diego
Silang.

13. Prizes and Exhibition
Many prizes were given by Spanish officials to encourage farmers, investors, artist,
and scholars. For example, in 853 a Filipino inventor won 2,000 and a gold medal for a
machine to clean hemp fibers.
Historical Values
1. Our country’s natural resources and wealth were not developed by Spain.
2. During Spanish times, the Spaniards benefited the most from the nation’s wealth, and
rich Filipinos copied their arrogant snobbishness and aristocratic ways.
3. There were a little development under Spain in land ownership, abolition of slavery,
new trade and companies, new banks, better roads and bridges, modern electricity,
railways and ship, the new middle class, and prizes and exhibitions.
4. But the oppression of the Filipinos by Spanish and the rich caused unhappiness and
led revolts and revolution later on.