de los reinos de las Indias_, the code of
Spanish colonial legislation, a whole title comprising seventy-nine
laws is devoted to this subject. For thirty years after the conquest
the commerce of the islands was unrestricted and their prosperity
advanced with great rapidity. [88] Then came a system of restrictions,
demanded by the protectionists in Spain, which limited the commerce
of the islands with America to a fixed annual amount, and effectively
checked their economic development. All the old travelers marvel
at the possibilities of the islands and at the blindness of Spain,
but the policy absurd as it may seem was but a logical application
of the protective system not essentially different from the forms
which it assumes today in our own relations to Porto Rico, Cuba,
and the Philippines.

The Seville merchants through whose hands the Spanish export trade to
the New World passed looked with apprehension upon the importation
of Chinese fabrics into America and the exportation of American
silver to pay for them. The silks of China undersold those of Spain
in Mexico and Peru, and the larger the export of silver to the East
the smaller to Spain. Consequently to protect Spanish industry and to
preserve to Spanish producers the American market, [89] the shipment
of Chinese cloths from Mexico to Peru was prohibited in 1587. In 1591
came the prohibition of all direct trade between Peru or other parts
of South America and China or the Philippines, [90] and in 1593 a
decree--not rigorously enforced till 1604--which absolutely limited
the trade between Mexico and the Philippines to $250,000 annually for
the exports to Mexico, and to $500,000 for the imports from Mexico, to
be carried in two ships not to exceed three hundred tons burden. [91]
No Spanish subject was allowed to trade in or with China, and the
Chinese trade was restricted to the merchants of that nation. [92]

All Chinese goods shipped to New Spain must be consumed there and
the shipping of Chinese cloths to Peru in any amount whatever even
for a gift, charitable endowment, or for use in divine worship was
absolutely prohibited. [93] As these regulations were evaded, in
1636 all commerce was interdicted between New Spain and Peru. [94]
A commerce naturally so lucrative as that between the Philippines and
New Spain when confined within such narrow limits yielded monopoly
profits. It was like a lottery in which every ticket drew a prize. In
these great profits ev