Published: August 20, 2011
King Charles III established the Royal Company of the Philippines on March 10, 1785. Its charter was for 25 years and had a capital stock of a P8,000,000 in 32,000 shares of P250 each. The king himself bought 4,000 shares of stock.
The rest of the shares were sold to the banks of Seville, San Carlos, and Havana, Cuba and to private citizens in Spain, the Philippines, Mexico, Cuba, Chile, Peru, and other Spanish colonies.
To help the company, the king granted it many privileges. Among these were (1) the monopoly of trade between Spain and the Philippines; (2) the exemption from taxes of tobacco shipments; (3) the abolition of the old restrictions prohibiting the exportation of Asian goods to Spain; (4) the privilege to use the flag of the Spanish Royal Navy on its vessels; and (5) the privilege to buy guns and ammunition from government factories.
The early ventures of the Royal Company of the Philippines were successful. But this success did not last long.
The company began to lose money steadily after 1792. In 1803 King Charles IV, who succeeded Charles III, extended its charter by 15 years, increased its capital stock to P12,000,000, and granted additional privileges such as (1) allowing foreigners to become stockholders of the company even if their monarchs were at war with Spain and (2) permitting the ships of the company to trade directly with China and India to sail back to Spain without calling at the port of Manila.
But this new lease on life could not save the company. By the Royal Decree of September 6, 1834, the company was finally abolished for bankruptcy. This decree also provided for something long needed by the country — the opening of the port of Manila to world commerce.
The two main reasons why the Royal Company of the Philippines failed were poor management and the opposition of the merchants in Manila.
In spite of its failure, the company contributed to the economic development of the Philippines. First, it opened Philippine commercial relations with Europe. Second, it fostered the production for export of indigo, pepper, and spices in the Philippines. And lastly, the company invested part of its capital to promote infant industries in the Philippine colony, including the textile industry and sericulture — the raising and keeping of silkworms for the production of varied silk.