so that if four merchant-vessels went to Peru annually, all the cloth goods would be sold, as well as everything else of the cargo. Because vessels go there only at long intervals, the people make use of goods from Nueva España and China. However, in the case of the Chinese goods, they are worn only by the very poor, and the negroes and mulattoes (both male and female), sambahigos, many Indians, and half-breeds, and this in great number. The silks of China are much used also in the churches of the Indians, which are thus adorned and made decent; while before, because of inability to buy the silks of España, the churches were very bare. As long as goods come in greater abundance, the kingdom will feel less anxiety, and the cheaper will be the goods. The increase to the royal exchequer will be greater, since the import duties and customs increase in proportion to the merchandise; and this increase cannot take place, if the fleets are laid up for the winter, for by this delay the merchant-vessels cannot be despatched annually on which, and upon their money not lying idle, depend the profits of the merchants.

Therefore the merchants of Peru declare that commerce should be opened with China, and that they should be permitted to send one million [ducados] annually in two vessels, and that this million bring back merchandise to the same port of Callao. This merchandise will yield six millions, of which ten per cent, paid to his Majesty, will amount to six hundred thousand ducados. And if the license for one million is not given, it should be for one-half, the duties on which would be three hundred thousand ducados.

Further they declare that, if this be not conceded to them, they should be permitted to buy and carry to Peru the merchandise taken from China to Nueva España. There the duties on this merchandise would be imposed, and they would pay seven per cent on them, notwithstanding that only five per cent is paid in Nueva España. Paying seven per cent on the merchandise from China bought in Mexico, it will be seen of what little importance the four to six millions of ducados that Sevilla pays to his Majesty are to the royal estate, because it does not consent that goods from China may enter Peru.

And I assert that, should his Majesty ask me for my opinion, I would tell him that, if it is true that the Chinese merchandise can in no way injure the commerce of España, while its benefit to Peru is certain - especially to the poor and common people, of whom there

is a great number and since it seems desirable, for the adornment of the churches of the Indians, that there should be goods from China, my opinion would be that license should be given for only one-half million (ordering under heavy penalties that this sum be not exceeded), to be used in the following manner: Four hundred thousand ducados' worth of merchandise should be brought, and one hundred thousand worth of gold bullion. The latter is likewise merchandise in China; but traders do not like to take it, as it yields them no more than fifty per cent, while on the other merchandise they make five hundred per cent and upward. Thus if this silver should be allowed to them, they would obtain gold, and this one-half million would yield three millions in Peru from merchandise which will be worth three hundred thousand ducados in import duties to his Majesty, besides the other dues imposed on the aforesaid goods. Thus the customs will increase, and, as said, these five hundred thousand ducados need not to be considered, as it is thought that this amount cannot diminish the commerce with España; for every year the merchandise of Peru yields six or seven millions, and if the trading fleets and armed galleys are sent at the same time, much more money will go to España, which on this account does not go there. These five hundred thousand ducados have, in previous years, always gone from China to Peru by way of Mexico; and as the merchants say truly, the winterings and increased duties and expenses of the winterings are causing the commerce to deteriorate. This is proved by the above arguments of the merchants, evidently cited from actual facts. Thus, if the merchants were provided with money, and were able to dispose of their cargoes every two years, and with the proceeds thereof begin new commercial enterprises, they would not be only exhausted and ruined, but rather they would be placed in easy circumstances and the country would be relieved from its difficulties by the gains thus made. With more goods, it is evident that the royal exchequer would benefit more as aforesaid. Therefore it would not be advisable to prohibit all commerce with China.

And at the very least, the five hundred thousand ducados should be granted, so that the merchandise taken to Mexico from China can be purchased in Mexico. Collecting in Peru the customs on these Chinese goods purchased in Mexico, seven per cent would be levied thereon, which plus the five per cent paid in Mexico, makes twelve per cent. The kingdom would feel greatly aggrieved if they were

deprived entirely of this commerce. And if Mexico continues to have trade with China, a considerable quantity of Chinese goods will, however many precautions will be taken, be hidden in the Mexican ships for Peru; while but very little of it will be seized, and his Majesty will lose almost four hundred thousand ducados, because the goods do not enter publicly. Therefore it would be advisable that this license be granted perpetually, with the above limitation.

A great lack of money has made itself felt in this colony; and, after having thoroughly investigated the cause thereof, it has been ascertained that it proceeds in part from the very great sum taken out annually for China. It is also attributed in part to the issue of the money from the treasury not that it has been less than in other years, but it has always been much more limited than it might be, and than is advisable for a commerce that is increasing in extent and value so much as is that of this kingdom. And since it would be greatly to the advantage of the treasurer to coin more money, they impute to him that, by not spending something at present, he is thus niggardly in making the necessary provision, and that by this he loses much and the state more. These two difficulties are reënforced by another that since there have hitherto been, for various reasons, very few traders who were inclined to buy silver from private persons and send it to the mint to have it coined on their account, it has resulted that four or five men have made themselves the masters of this traffic; consequently there has been a great increase this year in the loss incurred by those who sell their silver in order to be furnished with coin. All this has been observed at the time of the vessels and trading fleet; and it is a matter of much moment, in which it has seemed best to me to inform your Majesty, inasmuch as I have undertaken to institute a reform. This, please God, will be made with energy, as in breaking open a package. When the correctives usual in this region (which are mild) do not suffice, I will propose to your Majesty other and more severe measures, which might be adopted by the Council, and one might be of sufficient advantage to your Majesty. However, it were not advisable to discuss this, but that the necessity of the public government demands it and invokes it, since only at such times can it be called just or used as an argument.

I consider your Majesty's permit in regard to the money going to

the Philipinas as liberal and beyond the excess of what is carried as contraband, which is a very large amount. It is almost impossible to put a stop to this, notwithstanding, that I do not give permission, expressed or tacit, in that commerce for one real more than the amount allowed; and I have ordered vigorous investigations on this point at the time of the despatch of the vessels. But if it is easy to hide the money, there is little to fear in the penalties, although orders are given that they be executed. Accordingly, in case of the cloth that can be brought to and unloaded at Acapulco, I think that, as it has bulk, it can be locked up in some warehouse and examined, or (which would be more efficacious), that no limit be placed on the use of this class of goods in Nueva España, so that those persons whom the viceroy considers needy might not be restricted in wearing it. I fear greatly that in the case of the money, as it is so easy to hide, no sufficient reform can be instituted for this evil, as I see that there is no remedy in other things of like nature, either in the armed ships or the trading vessels from those kingdoms. There, however, is less damage; for this is all in money which goes to infidels and never returns, and thus militates against this country, and that [España], and greatly weakens the commerce of both. I recently made arrangements with Don Pedro de Acuña (as I wrote to your Majesty on another occasion) for making a personal inspection at Acapulco; it was decided that I should reject the money, and, because there have never been confiscations that cause fear, that some part of each one's share should be actually applied to the treasury, and that the same should be done in Manila. Since letters received from there state that goods are very dear because of the great quantities of money that go there, it must be that this inspection was not promptly made; and I fear that there is too much laxity there. For it would appear that those islands should grow rich with the increase of money, and that if they buy at high prices they must sell the goods here at high prices; and on this account regard and favor for that land must not give the governor and Audiencia opportunity to take severe measures toward this region. I intend to use rigor at the coming of the ships this year; for this is demanded by the prevalent excesses and our actual experience of the difficulties that result therefrom.

[Endorsed: "Copies of parts of letters from the Conde de Monterey, written to his Majesty, May 15, 1602."]

48. ROYAL DECREE REGULATING THE COMMERCE WITH

NEW SPAIN 1

[Valladolid, December 31, 1604. Blair and Robertson, The Philippine Islands, XIII, 256–267.]

The commerce between New Spain and the Philippine Islands was ordered to be continued. It was to be carefully controlled, however. Many rules and regulations for the better control of the trade were laid down in the decree. Irregularities and infractions of the laws were to cease. Great caution was to be exercised to prevent smuggling, and those caught engaging in illicit trade were to be punished according to law.

The King: The king my lord and father (may he rest in peace!) by various decrees prohibited trade and commerce of the Western Indias with the Philipinas Islands and China generally, to obviate the loss that resulted therefrom to these kingdoms and to their trade and commerce; and he ordered and commanded that no vessel whatsoever should go from the provinces of Peru, Tierra Firme, Guatimala, or any other part of the Western Indias, to the said kingdoms of China and the Philipinas Islands, under the penalties which were for that purpose imposed. But further, considering the importance of the preservation of the parts of those lands that are reduced to our obedience and to the Christian faith (which had been established there), and likewise for the greater extension of the gospel and of our holy Catholic faith, he allowed and gave permission for two ships to go each year from Nueva España to the said Philipinas Islands, each of three hundred toneladas, in which were to be conveyed reënforcements of troops and other things necessary, and the goods for trade which were to come thence to Nueva España, and which were shipped on account of the royal exchequer; the cost of sending these ships was to be taken from the freight-moneys for the goods, and the quantity and value of the goods freighted each year was not to exceed two hundred and fifty thousand pesos of eight reals, nor the return in money five hundred thousand for principal and profit, this trade being restricted to the citizens of the said Philipinas Islands. All the said goods must be

1 Reprinted by permission of the publishers, The Arthur H. Clark Company of Cleveland, from The Philippine Islands, 1493-1898. Cleveland, 1903 to 1909.