The following article is a translation of Montserrat Garate Ojanguren’s “Real Compañía de Filipinas” published in Enciclopedia Auñamendi, 2024.

The Royal Company of the Philippines was formally established in March 1785 and remained active until its dissolution in 1834, by decree on October 6. Before its official founding, several unsuccessful attempts were made to establish commercial ventures with the Philippines. One such effort occurred in 1732 when four merchants from Cádiz—Manuel de Arriola, Francisco de Arteaga, Juan Martínez de Albinagorta, and Juan de Leaequi—secured a ten-year permit to send ships to Manila. Their ships would depart from Cádiz carrying agricultural products like wines, spirits, and oils, along with European textiles. Upon their return, the vessels were expected to bring back a diverse range of goods, including copper, silk, tea, ceramics, medicinal herbs, and spices like pepper, cloves, and nutmeg.

To support this initiative, the monarchy granted exemptions from tonnage duties and other privileges. However, just a year later, the monarch, possibly influenced by Minister Patiño, shifted focus to creating a larger, more inclusive company that would involve a greater number of participants. This decision was likely inspired by the success of the Royal Guipuzcoan Company of Caracas, which had been established to manage trade with Venezuela. In 1733, a Royal Decree was issued, laying the foundation for the Royal Company of the Philippines with an initial capital of 4 million pesos and a 20-year operating period. However, despite this formal start, the company did not immediately materialize.

The Birth of the Royal Company of the Philippines

The true birth of the Royal Company of the Philippines occurred in 1785, spurred by the Guipuzcoan Company of Caracas, which had faced significant challenges following the introduction of free trade regulations in 1778. These regulations opened several metropolitan ports to direct trade with Hispanic colonies in the Americas, excluding Caracas, which remained under the exclusive control of the Guipuzcoan Company. However, in 1781, Venezuela was also opened to private trade, stripping the Guipuzcoan Company of its exclusivity and worsening its financial situation, already strained by the ongoing war with England.

In April 1781, the company held an extraordinary meeting, chaired by Minister José de Gálvez, to address its precarious position. During this meeting, Juan Bauptista de Goizueta, the company’s director, presented a thorough review of its operations. While private competition posed a challenge, the company was relieved of the costly burden of defending Venezuela’s coastline. In July 1784, another general meeting was held, where shareholders agreed to redirect the company’s focus. Francisco de Cabarrús, a shareholder and director of the San Carlos Bank, proposed expanding operations to include exclusive trade with the Philippines. This marked the official beginning of the Royal Company of the Philippines, which absorbed the capital of the Guipuzcoan Company and saw the participation of major guilds in Madrid.

The Objectives and Operations of the RCF

The primary mission of the Royal Company of the Philippines, as outlined in Article 13 of its founding decree, was to promote the economic development of the Philippine archipelago. Local inhabitants were permitted to engage in free trade with China and other Asian countries, while trade between Europe and the Philippines was reserved for the company. The decree allowed one-fifth of the company’s shipping capacity to be used by local traders, a policy reminiscent of the arrangement in Caracas, where Venezuelan farmers could use one-sixth of the ships’ capacity to send goods to metropolitan markets.

Despite its ambitious goals, the company faced numerous challenges. It was established with a capital of 8 million pesos for a 25-year period, but it never achieved the same level of economic success as its Venezuelan counterpart. The conflicts at the end of the 18th century, including wars with France and Britain, severely disrupted its operations. Additionally, the company was frequently called upon to assist the Royal Treasury, leading to financial strains and uncollectable debts.

The Eventful Existence and Decline of the RCF

The Napoleonic wars and subsequent political upheavals in Spain further compounded the company’s difficulties. During the French occupation of 1808, the company sought to circumvent trade restrictions by sending ships under the English flag from ports in England to the Americas. However, this strategy was only partially successful, with the expedition to Lima being the only one completed. Political instability in Spain and the eventual independence of Spanish colonies in the Americas exacerbated the company’s financial woes. The company was forced to lend funds to the Royal Treasury multiple times, but these loans were never repaid.

In 1820, the Constitutional Triennium, a period of liberal government, abolished the company’s privileges, further undermining its position. After the return of absolutism in 1823, the company’s precarious situation persisted, and in 1834, it was officially declared extinct. A liquidation committee was formed to oversee the closure, with representation from the shareholders, the king, and the Royal Treasury.

As historian M.ª Lourdes Díaz-Trechuelo Spinola succinctly summarized, the company’s downfall was the result of dramatic shifts in Spain’s political and economic landscape. Over its fifty-year existence, it witnessed four monarchs, two wars with Great Britain, two wars with France (including Spain’s war for independence), the emancipation of America, and profound ideological changes. Although inspired by the mercantilist economic doctrines of the 18th century, the Royal Company of the Philippines ultimately succumbed to the forces of 19th-century economic liberalism.

Source
Garate Ojanguren, Montserrat. “Real Compañía de Filipinas.” Enciclopedia Auñamendi, 2024. Accessed October 19, 2024. https://aunamendi.eusko-ikaskuntza.eus/es/real-compania-de-filipinas/ar-124780/