The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1898-12-07
NEEns OF PORTO RICO.
Secretary Gage Urges a Reformation
of Its Currency System.


An interesting portion of Secretary Gage
report relates to Porto Rico He says: IAN
important question, which will no doubt de-
mand consideration in Congress at an early
day, is The money situation in Porto Rico.
The existing currency of that island con-
sists of silver coins known as pesos and
centayos. Tie peso is of the weight and
fineness of five pesetas and corresponds in
both respects to the five-franc pieces of the
Latin Union. It's bullion value, compared
to the bullion value Of the American dol
lar, is as 93.5 is to 100. The centavo is one
hundredth of a peso, and the smaller coins
consist of 20 centavos and 40 centavos, these
being the exact counterparts in weight and
fineness of the Spanish pieces Of one and
two pesetas and the French coins Of one
and two francs.
1.-THE Porto Rican coins bear no fixed re-
lation to gold, not being anywhere redeem
able in the yellow coin. They were intro
duced into the island by Spain in 1895, and
by forced exchange were substituted for
Mexican coins, which had previously con-
stituted the principal money medium. The
best estimates obtainable place the volume
Of this silver money now circulating in Por-
to Rico at 5,500,G00 pesos. The fact that
the Spanish government put the same guam
tity of fine silver into the peso as it did into
the f1ve-peseta Spanish coin indicates pur-
pose to have maintained the two on a par
ity. If so, the purpose was not accom-
plished; the Porto Rican coins quickly fell
below the value of the coins of the home
government and have since had no estab-
lished relation in value to them. The oscil-
lation in value as related to gold coin has
been constant, rising and falling, as affected
by the state of the exchanges between Por-
to Rico and it's foreign markets.
at is unnecessary here to point out at
any length the general evil results upon in
dustry and commerce of a currency medium
so out of harmony with the worlds money
as to induce a widely huctuating rate of
exchange. 1t may be instructive to con-
slider them as illustrated in Porto Rico. Sit
uated as that island now is, with circu-
lating medium void of any established rela-
ton to the worlds money of commerce
gold--it is exposed to the fullest extent, to
such evil results. A brief statement of facts
will make this apparent Dating back to
1894, the peso has oscillated in its power to
buy sterling bills on London, or bills on New
York payable in American money, as fol-
lows: In 1894 the average value of the peso,
thus tested, was 6576 cents; in 1895 it was
In 1898 it was $50. But these averages by
no means represent steady, continuous
values. Each year, each day of the year, the
fluctuation has been wide. The limit of this
fluctuation was, in 1894, Is per cent; in 1895,
20 per cent; in 1896, 10 per cent; in 1897, II
per cent.
TAX ON INDUSTRY.
Upon this wavering, uncertain, variable
money medium the commercial and indus
trial affairs of the island have been con-
Quoted. The determining influence upon the
value of Porto Rican money seems to have
been the state of the foreign exchanges.
When exports of island products-sugar, to-
bacco and coffee-were large, the desire to
convert the value of these products, realized
abroad, into the domestic money creating,
as it did, an extra demand for it, caused the
peso to rise, or, what is equivalent, it caused
exchange to fall. From whatever point
viewed, the result was the same in its eff
feet upon the producer-he was deprived of
a just realization on his products. This I'M
fortunate currency condition was a tax upon
his enterprise and industry
"Contrariwise, when foreign bills were
not in supply, because crops had been
marketed, and when those engaged in i'm
porting wares and merchandise from abroad
were under necessity of settling their ac-
counts in London or New York, the offer
ing of domestic money to the bankers and
brokers in exchange for drafts on London
or New York increased in volume ex-
change rose in price, or, what is equiva-
lent, the peso fell in its power to exchange
for the worlds money.
Whichever way looked at, the effect was
the same in raising to the merchant, and
through him to the consumer, the cost of all
products purchased abroad. The domestic
and the wage-worker were the unconscious
but the real victims of these financial de-
rangements. The only beneficiaries We're
the speculator and the exchange dealer, for
to these two it is an axiom that the wider
the range of fuctuation the greater the
range for possible profits
1t is highly important that American
capital should find no obstacles in its trans
fer to and from Porto Rico If the United
States and the island alike to reap the
benefits which ought to flow from their
proximity, their new relations, and from
tho enterprising commercial spirit OF our
exchange, occasioned by the use of
differing and unrelated currency
is a serious obstacle TO the trans
fer of capital. as it is TO legitimate indus
try. The obstacle can and ought to be re-
moved.
1t is, therefore, suggested that, at the
proper time, action be taken by Congress
to assimilate tie currency of Porto Rico
TO that of the United States, so far and so
rapidly as this can be done without unduly
disturbing existing conditions and contract
relations with Porto Rico. This, 1t is be-
heved, can be accomplished by making Gus