lated notes in payment of the public dues a same with the insular treasurer, who should as above stated.

PROPOSED NEW COIN

Upon the general subject of currency f sion, after substantially one year's further the situation, and conferences with busine mendation made in its former report fo States-Filipino peso of the value of a half States, containing a small percentage less s lar, the percentage being such that its in any time warrant its export from the isla vision for its convertibility into money of pesos for $1 in money of the United States subsidiary coins. In consideration of the system, the commission has had the benefit of Mr. Charles A. Conant, an expert upon finance, who came to the islands, under you of aiding the commission in formulating a and uniform currency for the islands. N been of great value upon both subjects, ba

In renewing the recommendations made attention to the facts that a stable monet supply of sound currency are among the

the development of any commercial country; that the progress made in the restoration of peace and order, and the impending development of business in all directions, make the creation of such a currency an immediate and pressing necessity which should appeal strongly to Congress for its early action; that outside capital flows freely to a country where the standard is fixed and certain, but comes only gradually to one where it is doubtful in what form of money, transactions may be carried on and debts discharged; that the existing currency mainly depends upon the coinage of a different and distant country; that the principal coins in use, Mexican silver dollars, are made from a metal which is fluctuating in value in relation to gold, and that this creates serious difficulty, and that the Mexican dollar fluctuates not only with the value of silver bullion, but with the difficulty of obtaining the dollar, depending in part upon the special demand for it in China and other countries, so that its value in commercial transactions is determined neither by the price of silver bullion, nor by the value of a dollar in Mexico, nor its value in gold, nor its value in China, but by a combination of these influences, over which neither the Government of the Philippine Islands nor the business men in the islands can exercise a calculable and permanent control.

It is not desirable in our opinion to attempt to introduce American gold currency at the present time as the exclusive money of the Philippines. Such a course would produce serious disturbances in prices and wages. Substantially all the benefits anticipated from the intro'duction of American gold money can be obtained for the commerce of the United States and that of other gold-standard countries by establishing a definite relationship between the proposed silver coin and the American gold dollar. The benefits of definite relationship between two of the standard silver coins of the country and $1 in gold would be especially felt by American importers because of the simplicity of the relation; but in all other gold-standard countries the value of the Filipino coins would be definitely fixed in relation to their standard. In order to give fixity to the gold value of silver coins it is necessary to limit the quantity and to provide for their conversion into gold. Limitation of the quantity operates in regard to coins as in regard to commodities; the value is raised by scarcity. Upon this method of giving value to silver reliance is chiefly placed in the countries of the Latin Union, in Holland, and in the United States. The limitation of the coinage of silver to the amounts previously existing and to the amounts fixed by the government has given an artificial value to silver coins of all these countries, keeping them at par with gold.

It is therefore recommended that the government of the Philippine Islands be authorized by Congress to purchase silver bullion and coin it into pieces having an exchange value in the Philippines of 50 cents gold. These coins, with their corresponding subdivisions, will replace

face value in silver. The margin between the bullion value of silver will represent a treasury, which, in our opinion, should be This course would assure the public that, consisted of token coin, the gold necessa between the bullion of these coins and thei as a sacred fund for their protection, and plan of the government of the Philippine Is and appropriate the fictitious profits to its

We think it is desirable, if a gold standa some additional power should be given to t ippine Islands to maintain the parity betwe should be threatened. The power to sell deposits of the Philippine treasury in the U to issue temporary certificates of indebtedn ized in the United States by the act of Ju methods by which strength might be given confidence be maintained in the commerc said in favor of such powers that the mere would greatly diminish the necessity that The fear that the government might pern money to depart from their legal ratio an take steps to maintain this ratio would i rarely or never arise if it were known that with every necessary power to maintai unimpaired.

It seems to be desirable, as a tribute to Philippine local feeling, that the mint at Manila should be used as far as possible for the execution of the new coinage. Attached to our former report was an exhibit, stating in detail the size, facilities, capacity, and condition of the local mint and all the machinery therein. We would therefore recommend that proper experts be sent here at an early date and that adequate machinery be set up in the local mint, so far as its capacity will warrant. We think it would be wise to provide, however, if sufficient coinage can not be executed at the mint at Manila to meet the requirements of the new currency, that the mints of the United States be authorized to aid in the work, with proper compensation from the government of the Philippine Islands, as in the case of coinage for foreign governments.

It is the purpose and expectation of the commission, in case a distinctive coin is adopted for the Philippines, to introduce that coin as rapidly and completely as possible into the currency system of the islands. It is believed that the Mexican dollars will rapidly disappear if they cease to be a legal tender for debts after a prescribed date. They contain more silver than the proposed Filipino dollar if the plan of the commission is adopted. This will tend to expel the Mexican dollar and keep the new Filipino dollar at home for the use of the commerce of the islands.

The new coinage system should provide for subsidiary coins, onehalf peso; 1 peseta, or twenty centavos, which is one-fifth of a peso; a media peseta, or 10-centavo piece; and coins of other metals should be provided, so as to furnish 5-centavo and 1-centavo coins, the latter being of the value of one-half cent United States money. An adequate supply of these small coins is indispensable for the transaction of ordinary business among the poorer people of the islands, who make their purchases in very small amounts and need small coins for that purpose. All questions of exchange between the islands and the United States, which have caused much annoyance to the disbursing officers of the Army and Navy, will come to an end under such a system, except so far as they concern the legitimate cost of transporting the money. It is hoped that Congress will see fit, if this recommendation has your approval. to fix a short period within which all preparations shall be made for the adoption of a new and distinctive coinage, in order that proclamation may thus be made that the currency of the Philippine Islands is fixed beyond question upon the standard of other commercial nations, and that capital may safely come here for the purposes of trade and permanent investment.

BANKS AND BANKING.

On the 23d day of November, 1900, act No. 52 was passed, providing for the examination of hanking institutions in the Philippine Islands by the insular treasurer, or authorized deputy by him appointed, at

tered Bank of India, Australia and China, and the Monte de Piedad are hereto annex R, S, and T. Deposits of insular funds have tutions first named. The only security fo the general assets of the banks, consists o each of the two banks in United States Go ance with your orders issued before the islands. Both those banks are, as stated in of great English corporations of many ye institutions are liable for every dollar of t the Manila branches. While there never proposition, yet in response to cable sugges bureau of insular affairs, concurred in b Currency, we communicated with the pare assurances directly that they were respo insular deposits in the Manila branches. doubting the entire safety of the insular d in response to the cablegram referred to w of the local managers of those banks to security being given for the insular depo Chartered Bank of India, Australia and Chi immediately communicate with their home that office to open negotiations upon the Secretary of War at Washington. The lo kong and Shanghai Bank agreed that he wo