The Spanish colonial government was compelled to draw more profits from its feudal base in the Philippines to make up for the decline of the galleon trade and to adjust to the increasing pressures and demands of capitalist countries. The British victory in the Seven Years’ War, the Napoleonic wars and French occupation of Spain, the expansionist maneuvers of the United States and the rise of national independence movements in Latin America, and the sharp struggle between the “liberal republicans” and “absolute monarchists” in Spain had the total effect of goading colonial Spain to exploit the Filipino people further.
Under the strain of increasing exploitation, the national and democratic aspirations of the broad masses of the people rose. As oppression was stepped up, the spirit of resistance among the ruled, especially the peasant masses, became heightened until the Philippine Revolution of 1896 broke out.
The fullest development of feudalism under Spanish colonial rule was made. The peasant masses were compelled not only to continue producing a surplus in staple crops to feed and keep the colonial and feudal parasites in comfort but also produce an ever-increasing amount of raw material crops for export to various capitalist countries. The large-scale cultivation of sugar, hemp, tobacco, coconut and the like in some areas in turn required the production of a bigger surplus in staple food crops in other areas in order to sustain the large numbers of people concentrated in the production of export crops. Rice was imported whenever a general shortage occurred.
Thus, the expansion of foreign trade made by the Spanish colonialists entailed the acceleration of domestic trade and the wearing-out of a self-sufficient natural economy towards a commodity economy.
The exchange of agricultural products within the archipelago as well as the delivery of export crops to Manila and other trading ports and the provincial distribution of imported goods that served the wealthy, necessitated the improvement of transportation and communications.
The intensification of feudal exploitation included the adoption of the hated hacienda system, the rampant seizure of cultivated lands, the arbitrary raising of land rent and levies by both landlords and bureaucrats. The practice of monopoly, which meant dictated prices for the crops, further impoverished the peasants and enriched the bureaucrats. Landowning peasants either found themselves bankrupt or their lands arbitrarily included in the legal boundaries of large landlord estates. From 1803 to 1892, eighty-eight decrees were issued ostensibly to make landownership orderly but these merely legalized massive landgrabbing by the feudalists.
The improvement of transportation and communications aggravated by feudal exploitation of the people. Exercising their colonial powers, the Spaniards ordered the people in increasing numbers to build roads, bridges and ports and paid them extremely low nominal wages. Big gangs of men were taken to distant places to work. At the same time, the improvement of transportation and communications paved the way for wider contacts among the exploited and oppressed people despite the rulers’ subjective wish to use these only for their own profit. Also the introduction of the steamship and the railroad in connection with foreign and domestic trade contribute a great deal to the formation of the Filipino proletariat.
It was in the 19th century that the embryo of the Filipino proletariat became distinct. It was composed of the workers at the railroad, ships, docks, sugar mills, tobacco and cigar and cigarette factories, printing shops, breweries, foundries, merchandising firms and the like. They emerged in the transition from a feudal to a semifeudal economy.
The economic prosperity enjoyed mainly by the colonial rulers was shared to some extent by the principalia, especially the gobernadorcillo. The local puppet chieftains either had landholdings of their own or become big leaseholders on the landed estates of friars or lay Spanish officials. They engaged in trade and bought more lands with their profits in order to engage further in trade. In Manila and other principal trading ports, a local comprador class emerged correspondent to the shipping, commercial and banking houses put up by foreign capitalist firms including American, British, German and French ones.
A nascent Filipino bourgeoisie became more and more distinct as agricultural production rose and as the volume of exports likewise did. The port of Manila was formally opened to non-Spanish foreign ships in 1834 although foreign trade with capitalist countries was actually started much earlier. From 1855 to 1873, six other ports throughout the archipelago were opened. In 1869, the opening of the Suez Canal shortened the distance between the Philippines and Europe and thus accelerated economic and political contracts between the two.
In the second half of the 19th century, the entry of native students into the Royal and Pontifical University of Santo Tomas and other colonial-clerical colleges became conspicuously large.