The viceroy of Peru writes to Felipe III (April 12, 1612) in regard to the Philippine-Mexican trade, giving his report and opinion, at the king's command, regarding the request of the Sevilla merchants that the Philippine trade be taken from Mexico and transferred to Spain and Portugal. This letter is an interesting exposition of the theories regarding colonial administration then held by certain Spanish statesmen--and, more or less, of the policy then pursued by the Spanish government: for Montesclaros had already been a viceroy of Spanish colonies in America for nine years, at the time of this report, and was highly regarded by his home government. He describes the progress of commerce since the colonization of the New World began, and shows that the markets of the latter are overstocked with European merchandise, and thus the profits of the trade are greatly decreased. The viceroy carefully analyzes the proposal to transfer the Philippine trade to Spain, and shows its probable results. The Manila merchandise is almost entirely silk; this could be replaced in Mexico with the cotton fabrics made by the Indians in that country, and the silk industry might be introduced into Mexico and made a success there. Nevertheless, the Philippines would be injured by the suppression of their Mexican trade, and there would not even be a corresponding benefit to Spain. He has not much confidence in the disinterestedness of the Sevilla merchants, and refutes some of their arguments. The Spanish goods sent to Manila via Acapulco are mainly articles of luxury, and in small quantity; and the cloth stuffs of Spain are not desired in Japan or Luzon. He disapproves any course which would bring the Chinese silks into Spain, for thus the silk industry of that country would be ruined; moreover, the Chinese goods are poor and have little durability. Montesclaros emphatically denies that the stoppage of Philippine trade will materially affect the outflow of silver from Nueva Espana, or benefit Spain; and advises the king not to favor the Seville merchants or the Portuguese of India to the neglect of his Castilian subjects. He compares the advantages of the two routes between Manila and Spain, and considers that by the Pacific Ocean the better. The viceroy discusses the matter of sending reenforcements to the Philippines, and suggests that it might be advantageous to send troops to Acapulco via the Isthmus of Panama. He points out various dangers from the proposed suppression of he Philippine-Mexican trade.