Spain lost not only through war, but through peace. Her inelastic commerce invited competition, and British, Dutch, and other merchants began to cut down the great profits of the Philippine trade. These nations sent their ships to Canton, established factories, and bought goods for themselves, cutting off the Spanish monopoly of the traffic with the East. In 1731 foreign ships expended over $3,000,000 of Mexican coin in China for goods. These were smuggled into New Spain, not without help from Spaniards on shore. This proved a serious competition. The old hundred-per-cent. profit was no longer to be had. Acapulco was so beset with smugglers, whose merchandise found its way clandestinely to the city of Mexico, that, at times, buyers could not be found for the galleon-goods except at much reduced rates. Fraud and Speculation. Fraud now stepped in. Goods of inferior quality were sent and offered at old prices. Government inspectors were appointed at Manila to examine goods; but they filled their own pockets at the expense of the public service, and the frauds went on. Contraband goods were taken on the State-galleon itself, concealed in water-jars. The misfortunes that came to the Manila merchants in consequence, were due largely to their own fault: they had "sown the wind and reaped the whirlwind." There were certain public funds in Manila that offered themselves to speculative uses. These--known as the Obras Pias--were legacies left by pious persons whose interest was to be used to pay for masses for their souls. Two-thirds were to be lent at interest to traders, the remainder being held to cover losses. The Casa Misericordia was another pious fund that was lent at 40 per cent., sinking to 20 per cent. as trade grew less profitable. In the end, speculative ventures made way with much of this accumulated cash; sorely, it may be, to the misery of the poor souls in Purgatory, waiting to be prayed into Paradise. The Merchants of Cádiz. A new competition with Philippine commerce came into play at the beginning of the eighteenth century,--that of the merchants of Cádiz, who had grown jealous of the shipments from Manila to Mexico, which they claimed were injurious to the home-trade. Petitions were therefore sent to the King, who, in response, put a new curb on the scanty island-commerce, prohibiting trade with China in woven goods, skins, silk, and clothing, except fine linen. The imports from China were limited to fine linen, porcelain, wax, pepper, cinnamon, and cloves. Six months' grace was given, after which all stocks of prohibited goods in Manila were to be burned, and all sent to Mexico to be confiscated. There was nothing strange in this decree. England was at that time practising the same restriction toward her American colonies, though she did not order any goods to be burned. Royal Restrictions on Trade.