96 REPORT OF THE PHILIPPINE COMMISSION. taken in connection with the data given in the former report from the 18th day of August, 1900, to the 1st day of October, 1901: STATEMENT OF PUBLIC CIVIL FUNDS. Bank balances, semiweekly, from the 21st of November, 1900, to the 9th of October, 1901. REPORT OF THE PHILIPPINE COMMISSION. 97 Bank balances, semiweekly, from the 21st of November, 1900, to the 9th of October, 1901— Continued. 1,625, 498.77 1,612,057. 26 1,569, 371.08 1,548,086.25 1,511, 202.59 1,498, 159. 59 1,495, 469. 79 3,532, 475.33 1, 181, 814. 28 1, 199, 495.86 1,222,086.79 1,056, 991.20 3,698, 399.50 1,082, 124.87 1,097, 417.91 3,777,246.71 1,074, 775.65 3,814, 352.22 3,882, 142.67 3,937, 563.42 4,017, 313.34 3,959, 256, 57 4,014,.79.62 4,078, 230.37 4,345, 300.76 4,448, 197. 12 4, 169, 024.28 4,688,659. 35 4,671, 146. 16 4,740, 894.78 4,876, 934. 23 4,922, 663.54 4,980,155. 54 4,932, 152. 30 4,776, 993. 07 4,858, 208.36 4,868, 606.92 4,901, 830.70 4,957, 791.93 5, 014, 649. 44 5,051, 755.86 5,091, 081.52 1,095, 984.08 1, 135, 977. 93 1, 162, 530. 05 1,025, 002. 54 5, 174, 552.28 1,046, 837.29 1,061, 352.00 1,085,099.03 1, 119, 726. 17 1, 101, 161. 29 1, 126, 953. 22 1, 191, 940. 53 1,208,515. 38 1,238, 929. 26 1,260,627.46 1,080, 748. 77 1,097, 374.56 1, 110, 826.57 1, 134, 958. 94 1, 141, 963. 95 1,331, 941.02 1,342,920.67 1,361, 605.11 1,379,900. 98 1,383,079.21 1,390, 609.21 1,413, 191.25 1, 143, 397.39 September 21 4,724, 804.74 1,168, 965.54 September 28 4,522, 586.00 1,079, 604. 22 October 2.. October 5.. 4,604, 677.76 1, 120, 865.67 The circumstances that led to the imposition of the 10 per cent export duties upon Mexican silver having ceased to operate, act No. 213 was passed on the 31st day of August, 1901, repealing that export tax. At the present valuation of Mexican dollars, there is no inducement to export them, and the law was no longer subserving any useful purpose. P C 1901-PT 1—7 98 REPORT OF THE PHILIPPINE COMMISSION. The fact was stated in the former report that the local banks refused to receive deposits in money of the United States and required all such money to be exchanged into local currency before being deposited, commission being charged for exchange. Hence depositors were not able to withdraw their money in United States currency, but only in local currency, and if they wished United States money to use were obliged again to repurchase it from the banks, paying a commission for the exchange. This method of business was regarded as a discrimination against money of the United States, and accordingly, on the 28th day of November, 1900, act No. 53 was passed, requiring banks of deposit in the islands to accept deposits both in the money of the United States and in Mexican or local currency, and to repay such deposits by checks or otherwise in the kind of money in which they were made, but guarding the banks against being required to accept small and unprofitable deposits in any currency. This act, although unsatisfactory to the banks and by them called to the attention of the War Department, was approved by the War Department as a useful regulation of banking institutions, and has furnished great relief to all business men in the islands. Nor is it any hardship upon the banks. It simply deprives them of a kind of profit which it was unjust for them to reap, in view of the fact that they were gaining it by a discrimination against the money of the sovereign power in the islands. The effect of the military order referred to in the former report, authorizing the exchange of 2 pesos of local currency for $1 of money of the United States, coupled with the legislation referred to, to secure equal facilities for the deposit and payment of both currencies in the local banks, and the payment of sums due from the insular government to employees and others mainly in money of the United States, has been to secure an entirely stable currency throughout the islands since the 11th day of August, 1900, down to the date of this report, and it is considered that the securing of this result has been of very great advantage to all the people of the islands. At the present time the value of Mexican dollars as compared with gold is such that a dollar of money of the United States is worth something more than 2 pesos of local currency; but it has been considered of such importance to maintain a uniform ratio between the two temporarily, until Congress shall act upon the currency question, that the civil governor has fixed by proclamation the ratio of 2 to 1 between the two currencies for the ensuing quarter, commencing the 1st day of October, 1901. The effect of this order will probably be that importers and others having taxes to pay to the government will meet those payments almost wholly in local currency, and thereby the insular government will sustain a certain loss; that is, it will receive less intrinsic value than it would if the payments were all required to be made in gold, or if the ratio of $2.02 or $2.04, insular currency, to $1, money of the United REPORT OF THE PHILIPPINE COMMISSION. 99 States, had been fixed. But it is the opinion of the commission that the maintenance of a stable, uniform ratio for a few months longer will be of value to the business interests more than sufficient to compensate for the loss. If the scheme of recoinage hereinafter recommended shall be adopted, the Mexican dollars in the treasury will be available for recoinage, and a large seigniorage will accrue as profit to the treasury from the transaction, the Mexican dollars being available for that purpose. There has been considerable complaint that the United States. paper currency in circulation in the islands was soiled and torn, and it was an embarrassment to collecting officers to receive the currency and then to be unable to dispose of it in settlement of their balances with the insular treasury. To remedy this difficulty and to keep the currency fresh and clean, and thus render it more wholesome and likewise more satisfactory to the people of the islands, act No. 149 was passed on June 22, 1901, providing that it should be the duty of the insular treasurer to hold mutilated or worn-out notes that came into his possession and forward them to the United States Treasury for redemption in new notes fit for use, and the treasurer and other officials receiving money were authorized to receive worn-out or mutilated notes in payment of the public dues and to receive credit for the same with the insular treasurer, who should forward them for renewal, as above stated. PROPOSED NEW COINAGE. Upon the general subject of currency for the islands the commission, after substantially one year's further consideration and study of the situation, and conferences with business men, renews the recommendation made in its former report for the coinage of a United States-Filipino peso of the value of a half dollar, money of the United States, containing a small percentage less silver than the Mexican dollar, the percentage being such that its intrinsic value would not at any time warrant its export from the island for bullion, with a provision for its convertibility into money of the United States-Filipino · pesos for $1 in money of the United States, together with convenient. subsidiary coins. In consideration of the details of such a coinage system, the commission has had the benefit of the advice and assistance. of Mr. Charles A. Conant, an expert upon the subject of banking and finance, who came to the islands, under your direction, for the purpose of aiding the commission in formulating a plan for providing a stable and uniform currency for the islands. Mr. Conant's assistance has been of great value upon both subjects, banking and currency. In renewing the recommendations made upon this subject, we call attention to the facts that a stable monetary standard and sufficient. supply of sound currency are among the essential requirements for 100 REPORT OF THE PHILIPPINE COMMISSION. 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 introduction 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 |