The herald., 1898-12-03
Associated Press Special Wire

| ASSOclateu Press special wire
| WASHINGTON, Dec. 2.-Mr. Edward
w. Harden, who was appointed in August
last an honorary commissioner of the United
States to make an investigation of the
! financial and industrial conditions in the
philippines, has made his report to the
secretary of the treasury, in the course OF
which he says:
Silver is the basis Of the currency in the
Philippine islands. There is no gold in
general circulation and has been none for
more than twenty years. The Mexican dol
lar OF date previous to 1877 is current IN
the Islands, and it is practically the only
money in general circulation. The Spanish
government, in the summer of 1897, coined
50, 900, 600 of silver in a local currency which
was sent to the islands, but the scarcity Of
money in the Philippine islands caused them
to be quickly absorbed There is local note
issuing bank called the Banco Espanole Fill
ipino, which has in circulation notes based
on silver, of which there was outstanding
on September 80, 1898, approximately S2,-
100000.
The amount of money needed for the trade
and commerce of the Philippines fuctuatees
in the different seasons. In the height of
the sugar season-say from February to
,June-when large amounts of sugar are ex-
ported, there is sharp increase in the de-
mand for money. For the ordinary needs Of
the country little money is used, as the
credit system is in vogue throughout the
islands and there is, therefore, no great
amount of money needed for the payment
of wages to the laboring classes In the off
season, when exports are light the demand
for u-o,lJ ~.
circulating medium would be found to be
much more than sufficient for the needs of
the country.
The fluctuation in the demand for money
in different seasons of the year resulted IN
widely fuctuating rates of exchange and in
the continued flow of money either to or
from the islands. The law which prevented
the importation of the Mexican dollars of
a date subsequent to 1877 proved great
hardship to the business interests and
would have been much greater evil. had it
not been for the laxity of the officials, which
permitted and encouraged smuggling. 1t
was not uncommon for the dollar to 20 to
premium of 10 or IL per cent, and this would
Immediately start the flow of silver toward
the islands, which would be continued until
the demand was met and the rate of ex-
change was reduced to point which would
cause smuggling to cease being profitable.
The smuggling Of silver into the islands
was recognized industry. 1t was carried
on largely by the rich "Mestizos" or Chinese
half-castes There was a regular system
for the bringing in of these coins. The re-
suit of the Spanish laws was to make money
dear during the season when there was a
big demand for currency, and the producers
as well as the merchants and bankers have,
been robbed from year to year through the
effects OF the law in force.
After the occupation of Manila bv the
Amerlcan troops permission was given the
banks to import silver freely, and the result
has been to keep exchange rates on more
stable basis.
1t is estimated there is in circulation Sl0,-
100000 of subsidiary coins, the 10 cent. 20
cent and 80 cent pieces, which have been
reconed from Mexican dollars by the Span
ish government. The estimate of the Mex
lean dollars now in circulation, as given by
one of the best informed bankers in the
islands is from $2O,OOO,OOO to S25, 100000.
This, with the $2,5O0,000 of notes of the
Banco Espanola Filipino now in circulation
constitutes the currency of the islands. This
roughly, for the entire islands, or, approx
imately So per capita for the total popula-
ton of the islands. 1t must not be over.
looked that these figures are given on sill
yer basis and that, therefore, in figuring on
our own standard all Of these figures must be
cut in two.
Three banking institutions do the banking
business of the Philippine islands, aside from
that done by the large commercial houses
which buy and sell exchange, and, to
limited extent carry on the business which
legitimately belongs to banking institutions.
OF the three banks, the two most important
are branch concerns, the third being local
institution controlled by Spaniards and ma
tives.
The question of the future currency of the
islands is one of vital Importance to all bust
ness men on the islands, The best informed
men in Manila are unanimous in their opn-
ion that under present conditions the silver
currency is the only one suited to the islands.
A great deal of the trade of the Philippines
is with China and Japan, the Straits settle
ments, India and Australia In China,
Japan and India the whole trade is on sill
yer basis, though Japan has adopted the
gold standard, having, however, as the basis
of its currency gold dollar which is ap-
proximately worth only 80 cents, and, it's
currency, therefore, is on silver basis the
same as China and India. The natives OF
the Philippine islands are conservative to a
degree in the matter of their currency, and
it would be a long and tedious task to edu-
cate them to dollar which would be worth
twice that now in circulation. Notwith-
standing the Americans have force of 900
soldiers in Manila who are paid in gold, the
people of the islands will believe in nothing
but silver. All the soldiers, when they are
paid in gold, take their money to one of the
banks and exchange it for local currency
The natives will take the Mexican dollar
worth less than so cents in gold, in prefer
ence to the United States dollar, worth 100
cents. If the United States retains the
Philippine islands special coinage of silver
dollars might be minted for circulation in
the archipelago, the same as the British dol
lar has been put in circulation in the Straits