anufactures, took back specie for the continuance
of their traffic to the extent of three or four millions of pesos
each year. The King, however, refused to modify the decree of 1726
until the five years had expired, after which time the Governor was
ordered to load the galleons according to the former decree of 1720.

The Manila merchants were in great excitement. The Governor, under
pretext that the original Royal Decree ought to have been transmitted
direct to the Philippines and not merely communicated by the Mexican
Viceroy, agreed to "obey and not fulfil" its conditions.

From the year 1720, during the period of prohibitions, the Royal
Treasury lost about P50,000 per annum, and many of the taxes were
not recovered in full. Besides this, the donations to Government by
the citizens, which sometimes had amounted to P40,000 in one year,
ceased. A double loss was also caused to Mexico, for the people there
had to pay much higher prices for their stuffs supplied by Spanish
(home) monopolists, whilst Mexican coffers were being drained to make
good the deficits in the Philippine Treasury. The Manila merchants
were terribly alarmed, and meeting after meeting was held. A Congress
of Government officials and priests was convened, and each priest
was asked to express his opinion on the state of trade.

Commercial depression in the Philippines had never been so marked,
and the position of affairs was made known to the King in a petition,
which elicited the Royal Decree dated April 8, 1734. It provided
that the value of exports should thenceforth not exceed P500,000,
and the amount permitted to return was also raised to P1,000,000
(always on the supposition that 100 per cent. over cost laid down
would be realized). The dues and taxes paid in Acapulco on arrival,
and the dues paid in Manila on starting, amounted to 17 per cent. of
the million expected to return. [116] This covered the whole cost
of maintenance of ships, salaries, freight, and charges of all kinds
which were paid by Government in the first instance, and then recovered
from the _Consulado_.

The fixed number of merchants was to be decided by the merchants
themselves without Government intervention. Licence was granted
to allow those of Cavite to be of the number, and both Spaniards
and natives were eligible. Military and other professional men,
except ecclesiastics, could thenceforth be of the number. Foreigners
were strictly excluded. The right to ship (_bole