The herald., 1898-12-12
PORTO RICO REPORTS
AS SENT HOME BY SECRETARY
VANDERBILT
ISLAND EXPORTS ARE LARGE
But Not a Cent of the Returns Las
Ever Come Back From
Spain
Associated Press Special Wire

WASHINGTON. Dec. ll.-Assistant sec
retary Vanderlip, who is not expected mere
until December Goth, in his second informal
report OF his observations in Porto hico
says the history OF the currency situation is
about like this.
'The island some twenty-five years ago
was using American currency. At the time
of the emancipation the Spanish govern
ment found the value Of silver declining,
and it discovered it would be profitable to
make payment in Mexican dollars, and Ill
that way the currency was brought to
silver basis. The very payments for crops
made a redundant currency and great deal
of it was shipped away Eventually the
government decided on coinage for the
island, making a further profit by debasing
the silver peso. The silver in the peso is
900 fine. The Spanish government gave this
new peso a certain redeemability, offering
to redeem it at the Bank of Spain at Madrid
at So in gold, and l understand that some
OF the coins have been redeemed at that
rate, although comparatively few of them
have been carried back to Spain.
''One of the American commanders re-
ports to me that a condition that must be
taken into account is the ownership of most
OF the plantations. They are nearly all
owned by Spaniards: great many of them
by Spaniards residing in Spain. This mas
resulted, instead OF an apparent balance OF
trade considerably in favor of the island, in
real balance against the island. The great
sugar plantations owned by people residing
IN Spain have, year after year, raised crops
of sugar at an extremely low labor cost. The
sugar has been sold abroad and practically
the whole return for it has remained abroad.
creating no demand fer exchange against the
island. About the only thing that Mas been
imported is little calico, and while the
trade returns show a large excess of ex.
ports, the value of those exports never re.
turn in any form to the island. When the
American troops landed it was thought an
easy temporary solution of the situation to
fix the rate of exchange as between Amer.
lean dollars and pesos at two for one. That
worked satisfactorily for little while, but
the exchange dealers soon found that they
could make a more profitable rate of ex.
change, and our ratio therefore bec.me in.
effective and imperative. The settlement
OF the question lies between the two ex.
tremes; on the one hand, the fixing of the
value OF the peso at the exact value Of the
bullion, and on the other, giving it an equiv
alent gold value equal to the nominal re-
deemabe rate of 95 which the Spanish gov
ernment fixed.
An army officer with whom / talked is
in favor of an immediate forced substitution
OF our currency for the present Porto Rcan
currency and thinks this might be done by
a military order fixing the rate of ex-
change. The question is what rate should be
fixed. 1t is not believed the average rate
OF exchange for a series OF years should be
taken. Exchange dealers have controlled
the situation with little reference to the
actual balance of trade. Ii would be hard
ship on the debtor class to have the peso
too high, and the debtor class is the whole
working population of the island. There is
a great amount of small debts. No one seems
to work without this purpose Of debt be-
hind him. and to compel the repayment Of
these debts in coinage more valuable than
that in which they were contracted would
be a great hardship. 1t is believed by some
that TO undervalue the peso, gagged by the
average exchange rate, would work much
less hardship ard would really come very
near being just. 1t would enable the small
debtor class to more easily meet their obil-
cations and would even, if the exact bull
lion value were taken as a basis, still offer
ample profit to the money lenders, for they
have oppressed the borrowers with an in
genious variety Of methods. 1t was sug-
gested to me that with respect to the is
sues CT the Spanish bank they might be
redeemed in our money at the same rate of
exchange which we fix for the peso. Ii
l.. IL =. |, l., 1,1tt
attempt the redemption.
The volume Of the currency is reported
to be smaller than is generally estimated.
While the original currency was from five
to six million pesos, it is thought by some
that there may not now be more than four
millions that would be exchanged.
attempts are now being made to collect
internal taxes, but at present armed Guards
have to be sent with the collector. The
scheme Of taxation is something like this:
The central government levies on the munic-
ipalites Ga municipality covers not only a
city, but a district) a certain amount that
must be collected for the support of the
government. The municipality adds to that
further sums for local expenditures. The
scheme of taxation by which this total
amount was collected varies in the different
municipalities. Il is quite the reverse from
our internal revenue taxes, for little if any
thing is laid on the manufacture OF spirit:
and tobacco. The best of opinion is that
the judicious introduction OF our interna
revenue system and the abandonment Of the
| Spanish system would be wise. The rails
| ing OF taxes on spirits would be a popular
movement and the abandonment of Other
forms Of taxes would give the new scheme
further popularity. 1t is thought by some
for the present, we are collecting too mcet
revenue, for the reason that up to this timt
there has been practically no expenditure
There has been good deal Of disturb
ance and destruction Of property in Aqua
dilla, the province at the northwest corne,
OF the island, and in Mayaguez. 1t is though
half million dollars worth of propert,
has been destroyed in Aguadilla and tina
practically nothing could be raised there
this season."